The SoMBI Project
Climate change is one of today's grand challenges. The EU has committed itself to ambitious emission reduction targets: For 2030 and 2050, the EU aims at reducing its greenhouse gas (GHG) emissions compared to 1990 by 55% and climate neutrality respectively. For large emitters in industry and energy generation the EU has established the European Emission Trading System (EU ETS) in 2005 defining an EU-wide reduction target. Emissions from other sources, most notably from the household and transport sectors, are instead regulated at Member State level and should be reduced by 62% by 2030, with differentiated reduction targets for the individual Member States. To achieve the emission reduction targets in the Non-ETS sectors the issue of carbon pricing has recently gained in momentum in the political discussion at EU as well as at Member States level.
Objectives of the project
The project SoMBI aims at contributing to the research on the potential of carbon pricing for reducing GHG emissions in the EU Member States. Specifically, we will focus on two research questions:
- What are the effects of an EU-wide carbon price for the Non-ETS sectors that allows achieving the 40% reduction target in different Member States? I.e. what are the impacts on Member States' Non-ETS emissions, what are the macroeconomic impacts and what are the distributional impacts?
- What are the effects of different revenue recycling options in the different Member States?
To answer these questions, we will perform a model-based analysis with the new 'ADAGIO-DYNK' model. The CO2 price necessary to achieve the 30% EU-wide reduction target for the Non-ETS sectors will be estimated. Also, detailed results for two case study countries will be discussed. The countries (Austria and Poland) differ considerably in terms of the structure of their energy systems and economies. First, we will focus on the macroeconomic, emission and distributional impacts of the tax. Then, the effects of different revenue recycling options will be assessed and policy recommendations for the introduction of a carbon tax will be developed.