This page updated 28 January 2026. Policy in Depth aims to provide access to relevant online publications and CCL generated documents on Climate Income. It also includes articles on general carbon pricing where relevant.
General principles of carbon pricing
Meta-analysis of the published data on carbon pricing published in Nature Communications (May 2024) which states that emission reductions were real and ranged from -4% to -15% after correcting for publication bias. This contradicts earlier less systematic reviews which concluded that carbon pricing had little effect on emissions reductions. (Note this study did not address the equitability of the schemes and did not include the Canadian Climate Action Incentive Payment, the largest Climate Income scheme, as no studies were available at the time).
Report on a major study published in Science, Vol 385, Issue 6711, 22/8/24, pp. 884-892, evaluating climate policy measures from 41 countries up to 2022……The findings reveal a sobering reality: many policy measures have failed to achieve the necessary scale of emission reductions. Only 63 cases of successful climate policies, leading to average emission reductions of 19 percent, were identified. The key characteristic of these successful cases is the inclusion of tax and price incentives in well-designed policy mixes.
A multi-model assessment of inequality and climate change. (Nature, 4 October 2024)
Climate Policy Dashboard online tracker which monitors the progress the government is making against the objectives stated in the Committee on Climate Change’s 6th Carbon Budget.
Philosophical argument for CF&D in a post pandemic world. (2021) Discusses the three most common objections to CF&D – Carbon taxes won’t change anyone’s behaviour, will increase inequalities and carbon taxes are superfluous and what is really needed is fundamental, systematic change
The EN-ROADS Climate Solutions Simulator developed by MIT enables the interactive demonstration of the effect of climate policies including carbon pricing. For more information see The argument for a worldwide carbon pricing policy section below. Training videos are available on the EN-ROADS website.
The Carbon Pricing Incidence Calculator (CPIC) was developed by Mercator Research Institute on Global Commons and Climate Change (MCC), a scientific think tank based in Berlin, Germany. It allows the user to explore the distributional consequences of carbon pricing and various compensation measures in an accessible manner for (currently) 87 countries. The tool calculates the additional costs to households after a carbon price is introduced, i.e. the carbon pricing incidence
The debate on carbon pricing in the US
James Hansen was the earliest champion of carbon fee and dividend in The Storms of My Grandchildren, (2009).
A steadily rising carbon tax and dividend was the way forward favoured by over 3,600 US economists, including 28 Nobel laureates in a letter published on 17/1/2019. The group has stated that “a carbon tax offers the most cost-effective lever to reduce carbon emissions at the scale and speed that is necessary”, continuing “all revenues should be returned directly to citizens… to maximize fairness and political viability”. This is the largest public statement of economists in history.
Why Fee and Dividend Will Reduce Emissions Faster Than Other Carbon Pricing Policy Options Miller and Hansen, Nov 2019) was a response to the HR Select Committee on the Climate Crisis.
In January 2026 a law was passed which would have the Department of Energy commission a study comparing the carbon intensity of certain domestically-made goods to the goods produced in other countries. This shows the effectiveness of carbon pricing and specifically the Carbon Border Adjustment Mechanism fully implemented by the EU in January 2026.
Climate Income implementation in British Columbia and Canada
British Columbia has had CF&D since 2008. The policy has cut emissions by 5 to 15% from what they would have otherwise been, encouraging the purchase of more fuel-efficient cars, and decreasing consumption of natural gas use, all while supporting increased employment. A 2014 report detailed the success of the policy after 6 years.
Analytical Advisors, an Ottawa-based firm that monitors Canada’s clean technology sector, reported in CCL news in (20/9/16) that sales in British Columbia’s clean technology industry increased by 48 percent in two years after the introduction of the province’s revenue neutral carbon tax in 2008.
Inspired by the results in British Columbia the Federal Government adopted CF&D (known in Canada as the Climate action oncentive payment (CAIP)) as a backstop measure for states which hadn’t adopted their own carbon pricing policy in January 2019. It was introduced at $20 per tonne of GHG (emissions) in 2019, rising by $10 pa until 2022, then by $15, rising to $170 per tonne by 2030.
Carbon fee and dividend in Canada (report by CCL Europe)
Canada’s estimated results of the federal carbon pollution pricing system: Reports the estimated effects of emissions reductions measures. It states that Carbon pricing will prevent 80-90 MT of Greenhouse gas emissions by 2022, Clean Fuel Standard 30 MT by 2030, Methane regulations 21MT by 2025, and Coal Phase Out 16 MT by 2030.
Reviewing the Fiscal and Distributional Analysis of the Federal Carbon Pricing System (Feb 4th 2020)
Modelling of a carbon fee and dividend by think tank, Clean Prosperity (Nov, 2020)
Canada’s strengthened climate plan to create jobs and support people, communities and the planet. (Dec 2020)
An explanatory article about the tax published in August 2021. What is Canada’s National Carbon Tax and how does it affect us?
How Canada figured out a carbon tax and gave the money back – Zero – Omny.fm Podcast (and transcript) of an interview by Akshat Rathi of Bloomberg Green with Catherine Mckenna about how the implementation of the Climate action incentive payment. (13/7/23)
Report which details the effect of the climate legislation on household budgets, September 2023 https://cleanenergycanada.org/report/a-clean-bill/
Implementation of the Climate action incentive payment 2019 – 2025
A major flaw of the dividend implementation was that the dividend wasn’t transparent enough which enabled conservative leaning parties to claim it reimbursed less than it actually did, an issue highlighted in this Nature Climate Change article…Limited impacts of carbon tax rebate programmes on public support for carbon pricing | Nature Climate Change.
The article examined the response to CF&D in Switzerland and Canada. It acknowledged that the Canadian Government have realised the problem and are resolving it…”The government of Canada has announced that future rebates, which will steadily increase in value, will be delivered to households directly. However, in Switzerland, voters rejected an increase in the country’s carbon tax rate, alongside increased rebates, in June 2021 when faced with intense politicisation of policy costs by opponents”.
A September 2023 report, ‘A Clean Bill – Making the switch to clean energy cuts carbon and cost from household energy bills’, explained the effects of the climate legislation on householders. It stated… “Under the federal government’s system, the carbon price costs an average of $578 annually per household, while the average climate action incentive payment is $712 per year. Put simply, most Canadians are actually better off, receiving more money back than they pay.”
In the autumn of 2023 it was announced that the carbon price was to be removed from heating oil for three years. This article by CleanTechnica discusses the real impact of the climate action incentive payment and the reason for the 3 year exemption. As in the UK many people dependent on heating oil are the least logistically able to retrofit and the most hard hit by the fuel price crisis of the past year.
The conservative kick back on carbon pricing prompted a defence by Canadian Economists in 2024, submitting an Open Letter. CCL Canada produced a comprehensive guide on the value of carbon pricing and specifically the Canadian model.
Current situation after the 2025 election
Sadly the conservative kick back which erroneously claimed that the carbon price increased inflation became a major theme in the Canadian election in April 2025. Mark Carney decided that it was an electoral liability and as the stakes were so high Carney felt he had to jettison the tax……..It was political expediency, full stop. The consumer tax, for better or for worse, was hugely divisive. The Conservatives were very successful at making it a very divisive issue. It taxed gasoline at the pump, I mentioned that Canadians are struggling, that is a hot button issue here. It did redistribute the income to provinces and territories, most of which was then mailed out to Canadians as rebate checks. Despite this, it was very unpopular. People didn’t understand it. The Conservatives blamed it for higher prices, and in fact, when Carney cancelled it, he said, ‘This is too divisive, that’s why I’m cancelling it.’ But he promised that he would put green consumer incentives in place that would be just as effective. So we will see what will come from those. ‘Canada Picks a Climate Leader to Butt Heads With Trump‘ Transcript of Bloomberg Zero podcast, 1st May 2025.
CCL Canada press release: New Government, Same Emergency Citizens’ Climate Lobby Canada Calls for Bold Action 29th April 2025
The situation in the UK
Discussions on carbon pricing 2018-2024
The Future of Carbon Pricing (Policy Exchange, July 2018)……An economy-wide carbon tax paid by both domestic and international producers would prevent carbon leakage, level the playing field for Britheavy industry, fund a dividend to be paid to taxpayers and tackle climate change.………economy-wide carbon pricing could on its own reduce emissions 80% by 2050. Furthermore, studies of the US economy demonstrate that sensibly implemented, economy-wide carbon pricing can actually boost, rather than reduce, GDP (see REMI report).
Making Carbon Pricing Work for Citizens (July 2018) Oxford Martin School, the Mercator Research Institute on Global Commons and Climate Change, and the London School of Economics and Political Science (LSE)…..traditional economic lessons on efficiency and equity are subsidiary to the primary challenge of garnering greater political acceptability. One of the paper’s authors, Lord Nicholas Stern, IG Patel Chair of Economics and Government, LSE, wrote in The Economics of Climate Change: The Stern Review, (2006) that…’without action, the overall costs of climate change will be equivalent to losing at least 5% of global gross domestic product (GDP) each year, now and forever’.
Global lessons in carbon taxes for the UK Policy Brief (Grantham Institute (LSE), August 2019)
The Future of UK Carbon Pricing (UK Government BEIS report, June 2020). The section pertaining to CF&D (pp.38-9) refers to CCL’s responses to the government consultation……Advocates of the approach highlight that a well-designed scheme would have social and environmental benefits, equitably distributing the revenues and stimulating investment in low carbon technologies……..emissions to be reduced in a cost effective and technology-neutral way, while mobilising the private sector to invest in emissions reduction technologies and measures.
Pricing Carbon during the economic recovery from the COVID-19 pandemic (Grantham Institute (London School of Economics), May 2020)…….But by setting a strong market signal through a meaningful carbon price, the dynamic is changed: instead of trying to replace the market, we free it to solve the problem of carbon emissions, and without spending a penny of taxpayers’ money.
Distributional Impacts of Carbon Pricing on Households (May 2020) (Carbon Pricing Leadership Coalition, UK is a member; briefing prepared by Climate Strategies)
Distributional Impacts of a Carbon Price in the UK (Grantham Institute (London School of Economics), March 2020) states that……Judicious use of carbon tax revenues can help ensure distributional fairness and protection for low-income and fuel-poor households while driving the transition to net-zero emissions in the UK by 2050.
In July 2021 the cross party Environmental Justice Commission and the left-leaning IPPR think tank published Fairness and Opportunity: A people powered plan for the green transition. This called for a ‘people’s dividend’.
In October 2021 the influential right wing think tank The Centre for Policy Studies published a report on ‘Pricing Pollution Properly’.
In April 2022 the UBI Centre published The progressivity of a UK carbon dividend…..we find that levying a fee on each tonne of carbon emissions, and redistributing the proceeds equally to all UK residents, would have a progressive distributional impact. A carbon dividend would significantly reduce poverty and inequality, and the larger the program, the more of each it does.
In August 2022 CCL UK wrote a report on how Climate Income could be a solution to the Cost of Living crisis and produced statistics on predicted carbon fee and dividend revenues (see Nice in theory but what kind of sums are we talking about?, Frequently Asked Questions). This was followed up by an article in May 2024 by James Collis of Citizens’ Climate Europe, further detailing how Climate Income could be implemented alongside the current UK carbon pricing regime. (see Climate Income page and The world has changed since 2021, how appropriate would Climate Income be for the UK now?, Frequently Asked Questions).
General Election 2024: Climate change priorities for the next UK Government (p.8) Grantham Institute report which emphasises that carbon pricing expansion must be fair…… Government should ensure the impacts of carbon pricing are distributed fairly – for example, explicitly using carbon pricing revenues to correct undesireable distributional outcomes….
Discussions on carbon pricing since the 2024 General Election.
For information on the challenges which were faced by the new UK Government see the Carbon Brief article Experts: What is the Labour government’s top priority for meeting UK climate targets?. Carbon Brief is a ‘UK-based website covering the latest developments in climate science, climate policy and energy policy’.
Since the general election of 2024 CCL UK has been following the progress of Citizens’ Climate Europe which has become a key player in the discussions around the use of ETS2 (building and transport) revenue as a direct rebate to consumers who will have become directly effected by the carbon pricing of transport and heating fuel. The UK now plans to realign with the EU ETS and may therefore adopt ETS2.
In February 2025 Citizens’ Climate Europe wrote a policy brief clarifying that EU law does allow for direct payments to citizens. Policy Brief: Misconceptions about Climate Dividend Schemes as basis for direct income support (2025):
Reports on the feasibility of Climate Income based on ETS2 revenues from other European NGOs.
The European Environmental Bureau (EEB) explains the case for direct payments from ETS2 revenue in Why direct payments are necessary to make carbon pricing for households work in the EU (EEB, April 2025).
The Policy Paper How to make the ETS2 socially acceptable (Institut Jacques Delors, November 2025) is a good summary of the arguments for redistribution of ETS2 revenue and the problems with the design of the Austrian Klimabonus (see below and for link to PDF of above article).
Transport and Environment (T&E), also argues for revenue redistribution (T&E, June 2025). information on the challenges which were faced by the new UK Government see the Carbon Brief article Experts: What is the Labour government’s top priority for meeting UK climate targets?. Carbon Brief is a ‘UK-based website covering the latest developments in climate science, climate policy and energy policy’.
Switzerland
Climate Dividend – the exponential way forward in emission pricing (White paper prepared by Cleantech21, Switzerland, March 2020). Switzerland has put a fee on heating oil/gas since 2008 with two thirds returned dividend and one third to a building renovation fund. Current price (2020) is USD100/tCO2
Taxing Energy Use 2019: Country Note – Switzerland
Austria
Klimabonus was introduced in 2022. …..The Klimabonus program puts a price on climate-damaging pollution and returns revenues to individuals and families, taking into account the availability of public transport and heating options (as in Canada). It was adopted as a national carbon price in advance of adopting the ETS 2 extension to buildings and transport.
Sadly the Klimabonus also became an electoral liability in 2025 for the same reasons as in Canada.The report How to make ETS2 socially acceptable, gives a good summary of some issues of the financing of the Klimabonus and assessing the revenue differentiation which made it an easy target (p.8,12) as well as the issues which prevented the adoption of a Klimageld in Germany (p.6, 12). The report puts forward the case for a form of Climate Income based on the revenue from ETS2.
Sweden : A carbon tax without a redistributive element (Sweden)
The distributional effects of a carbon tax: The role of income inequality (Grantham Institute (London School of Economics), September 2020)The distributional effects of a carbon tax: The role of income inequality (Grantham Institute (London School of Economics), September 2020)
The argument for a worldwide carbon pricing policy and implications for a just transition for the global south.
In 2016, the 195 nations who signed the Paris Agreement asked the Intergovernmental Panel on Climate Change (IPCC) to study the implications of a 1.5°C global temperature target. Their report, entitled Global Warming of 1.5°C, was released in October 2018. This report clarifies the benefits of holding the modern-day rise in global average temperature to 1.5°C rather than 2.0°C. The report states that high prices on Greenhouse gas emissions will be necessary to cost-effectively stay below 1.5°C. To prevent a tax revolt, the money collected must be returned to the people.
The IPCC report underscores the importance of quickly adopting strong carbon pricing. Most importantly, Climate Income enacted globally would cut emissions 50 percent by 2034, a level consistent with the IPCC recommendation for staying below 1.5°C. The graph models the price rising by $10 pa.
The EN-ROADS Policy Simulator from Climate Interactive can be used to test various plans for controlling global temperatures:
- Current projections indicate the planet is on track for a baseline global warming 3.6ºC by 2100.
- Ending fossil fuel subsidies made no material difference: 3.6ºC
- Subsidizing renewables barely budged the global temperature: 3.5ºC
- Subsidizing renewables + aggressively taxing Fossil Fuels: 3.0ºC
- Pricing greenhouse gas (carbon) pollution as per IPCC recommendations: 2.6ºC.
The C-Roads Climate Change Policy Simulator can be used to test the effectiveness of climate policies applied to various countries or groups such as India, China, US, EU and other developed/developing nations (ie adhering to the IPCC 2018 report suggestion to peak emissions by 2025, reducing by 8% pa to a 40% reduction by 2030 to keep 1.5 Celsius in sight). The simulator reinforces the need for the developed world to support the developing world on their path to net zero.
This edition of the IMF Finance and Development magazine (Dec 2019) is dedicated to the economics of climate change. In the article “Putting a price on pollution: Carbon-pricing strategies could hold the key to meeting the world’s climate stabilization goals ” (p16) Ian Parry, principal environmental fiscal policy expert, IMF Fiscal Affairs Department, puts the case for carbon pricing with a mitigating/redistributive element (he doesn’t directly refer to CF&D) and against emission trading systems….And although trading systems provide more certainty in respect to future emissions, they provide less certainty regarding emission prices, which might deter clean-technology investment.
There is also an article by Mark Carney, then Governor of the Bank of England, “Fifty Shades of Green: The world needs a new, sustainable financial system to stop runaway climate change” (p.13)……The world needs a “radical” shift towards renewables to reach net-zero emissions by 2050 and secure the 1.5C goal. It argues for a total transformation of the energy systems that underpin our economies, with no new oil or gas sites to be developed beyond this year.
Protecting the poor with a carbon tax and equal per capita dividend Nature Climate Change, Nov 2021.The benefit of imposing an international Climate Income system, especially if the dividend could be returned on an equal per capita basis globally.
TOLL GATES AND MONEY PUMPS: Why carbon taxation could be a simple, fair and transformative policy instrument., Autonomy, March 2022. The report by the Autonomy think tank outlines how a globally applied carbon fee and dividend policy would be extremely effective at lifting the poorest countries out of poverty and more than a billion people above the global poverty line, as well as combating climate change.
Utilizing basic income to create a sustainable, poverty-free tomorrow, Cell Reports Sustainability, June 2024. The largest study of its kind, based on an analysis of 186 countries….We posit that BI can be a pivotal instrument in the global pursuit of poverty alleviation and “nature-positive” sustainable development. Crucially, its execution must be designed to yield a dual triumph: assuaging economic insecurity, especially among the world’s low-income populations, while also ensuring intergenerational equity by safeguarding the environment for posterity.
Basic income could solve global poverty and stop environmental destruction, study finds, The University of British Columbia, 2024, report on the Cell Reports Sustainability article………A basic income could boost global gross domestic product (GDP) by $US163 trillion while acting to curb environmental degradation, UBC research has found.
An analysis of 186 countries found that providing basic income, or regular, set payments to all adults in the world, could boost global GDP by about 130 per cent. For every dollar invested, approximately US$4 to $7 of economic impacts could be generated, according to the study published today in Cell Reports Sustainability, which the researchers believe is the largest of its kind to date.
CCL news report on the above article.
Other CCL websites:
Citizens’ Climate Lobby Canada
Citizens’ Climate Lobby Australia