ABSTRACT
The scientific research has shown how the rising concentration of greenhouse gases (GHG) is very likely to be associated with changes in world climate (IPCC, 2007). A relevant role in determining the level of greenhouse gases (GHG) in the atmosphere is represented by CO2 emissions from fuel combustion (IEA, 2012). For this reason, in order to minimise the negative effects of climate change, the relative cost of the various types of energy sources should reflect their carbon content and not only the cost of the associated energy technology. In order to introduce such a cost structure government intervention is needed, and reorienting energy taxation represents a potentially effective policy strategy (OECD, 2010; OECD, 2011). The taxation of energy products is in fact not necessarily in line with the environmental consequences — CO2 emissions in particular — of energy use. Ecological (or environmental-oriented) Tax Reforms (ETR) aim at implementing the changes needed to reorient energy taxation, and they are mainly represented by the introduction of carbon taxation, or by its gradual increase. This paper is devoted to the study of the distributional implications of ETRs, concentrating on low- and middle-income households which may be disproportionately affected by carbon tax.
