Can a CO2 Tax Be Socially Just? Analysis of the Social Distribution Effects of the German CO2 Taxation

Rising energy costs have led to increased discussion about the social impact of the energy transition in Germany in recent years. In 2021, a gradually increasing CO2 tax was introduced. This paper analyzes the question of whether a CO2 tax can be socially just. Using data analysis and desk research, correlations between income and energy consumption in Germany are shown. In a short analysis, it is investigated which additional burdens different types of private households have to expect in the coming years due to the introduction of CO2 pricing on energy. In particular, the introduction of a per capita flat rate fed by CO2 tax revenues could be a suitable way to reduce the burden on low-income households.

Automated summary

Rising energy costs in Germany have sparked discussions about the social impact of the energy transition. The introduction of a gradually increasing CO2 tax in 2021 has prompted an analysis on the social justice of such a tax. Data analysis and desk research reveal the correlation between income and energy consumption in Germany, and a short-term analysis examines the additional burdens different types of households may face due to the introduction of CO2 pricing. Introducing a per capita flat rate fed by CO2 tax revenues could be a suitable solution to alleviate the burden on low-income households.