Spatial effects of carbon pricing on transport equity

Abstract

There is an ongoing process that greenhouse gas emissions of transport will be incorporated in the European Emissions Trading System. The cap-and-trade approach will result in substantial price increases for fossil fuels which will affect affordability of the transport systems. Within this paper the regressive effect on car-owning households is described in different area categories of the urban and rural region in Germany. Equal-per-household redistribution of the carbon revenue could reverse the regressive effect into a progressive effect. However, there is substantial variation within the different economic status groups leaving notable shares of households with a very low economic status without a positive net transfer. This share will be lowest in the metropolises of the urban region and highest in small-sized cities/village areas of the urban and rural region. Particularly in the latter area categories, these households may need temporary mobility allowances due to limited abatement options. Despite the environmental bonus, electric car-owning households still belong to groups of higher economic status, and public transport supply is limited, particularly in the small-sized cities/village areas of the urban and rural region.