Climate Justice and Carbon Pricing

Carefully crafted and ambitious carbon pricing policies can be powerful tools for transitioning to a low-carbon economy. They capture the external costs of carbon emissions and increase the price of high-carbon products and services, which makes low-carbon products and services financially more attractive and competitive. Yet, increasing prices for certain products and services affects some parts of the society more than others. For this reason, some carbon pricing policies incorporate provisions that address and remedy inequalities and climate injustice. As a first step, this paper analyses and compares European and North American carbon pricing policies with regard to the ways in which they address climate justice aspects. A typology of different ways to incorporate climate justice in carbon pricing policies is developed. As a second step, the observed differences and similarities are explored and explained in a Qualitative Comparative Analysis (QCA). QCA identifies necessary conditions and unveils combinations of sufficient conditions for explaining a specific outcome. It captures causal complexity expressed in conjunctural causation, equifinality and causal asymmetry. The explanatory factors that will be tested include framing by different actors in the political debate, interest group constellations and power, level of ambition of the carbon pricing policy, and policy mixes. Categorising climate justice provisions in carbon pricing policies and understanding why they were adopted can help improve future policy designs.