The Climate Change Challenge and Fiscal Instruments and Policies in the EU

61 Pages Posted: 20 Apr 2023

See all articles by Aris Avgousti

Aris Avgousti

Central Bank of Cyprus

Francesco Caprioli

Bank of Italy

Giacomo Caracciolo

Bank of Italy

Marion Cochard

Banque de France

Pietro Dallari

International Monetary Fund (IMF); European Central Bank (ECB)

Mar Delgado-Téllez

European Central Bank (ECB)

M. Ferdinandusse

European Central Bank (ECB)

Daniela Filip

European Central Bank (ECB)

Doris Prammer

Austrian National Bank

Katja Schmidt

Banque de France

Anastasia Theofilakou

Bank of Greece

Date Written: April, 2023

Abstract

Fiscal policy plays a prominent role in climate change mitigation and adaptation. An optimal combination of revenue policies, in particular taxes, and expenditure policies, such as subsidies and investment, is essential in order to achieve greenhouse gas emissions targets. This paper analyses the main fiscal instruments in place in European Union Member States, focusing on specific issues, such as the fiscal impact of extreme weather events, the interaction between debt sustainability and climate change, the green investment gap and the distributional impact of climate policies. The paper aims to provide an overview of existing fiscal policies and of the main fiscal challenges for a comprehensive European climate change strategy.

Keywords: carbon tax, climate change, debt sustainability, extreme weather events, green investment, redistribution

JEL Classification: H2, H5, H6, Q54, Q58, D63

Suggested Citation

Avgousti, Aris and Caprioli, Francesco and Caracciolo, Giacomo and Cochard, Marion and Dallari, Pietro and Delgado-Téllez, Mar and Ferdinandusse, M. and Filip, Daniela and Prammer, Doris and Schmidt, Katja and Theofilakou, Anastasia, The Climate Change Challenge and Fiscal Instruments and Policies in the EU (April, 2023). ECB Occasional Paper No. 2023/315, Available at SSRN: https://ssrn.com/abstract=4424152 or http://dx.doi.org/10.2139/ssrn.4424152

Aris Avgousti (Contact Author)

Central Bank of Cyprus ( email )

80 Kennedy Ave
1076 Nicosia
Cyprus

Francesco Caprioli

Bank of Italy ( email )

Via Nazionale 91
00184 Roma
Italy

Giacomo Caracciolo

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Marion Cochard

Banque de France ( email )

Paris
France

Pietro Dallari

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Mar Delgado-Téllez

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

M. Ferdinandusse

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Daniela Filip

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Doris Prammer

Austrian National Bank ( email )

Otto-Wagner-Platz, 3
Wien, 1090
Austria

Katja Schmidt

Banque de France ( email )

Paris
France

Anastasia Theofilakou

Bank of Greece ( email )

21 E. Venizelos Avenue
GR 102 50 Athens
Greece

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