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Supporting carbon pricing when interest rates are higher

To accept carbon pricing, citizens desire viable alternatives to fossil fuel-based options. As inflation and higher interest rates have exacerbated access barriers for capital-intensive green substitutes, the political success of carbon pricing will be measured by how well policy design enables consumers to switch.

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Fig. 1: Support for EU carbon pricing with different revenue recycling options.


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We thank O. Edenhofer, N. Farrell, T. Konc, M. Pahle, P. Singhal and L. Stern for helpful comments, and J. Muhlke for excellent research assistance. L.M. and F.F. thank the Robert Bosch Foundation. F.F. further acknowledges funding from the German Academic Scholarship Foundation. J.E.S. thanks the Alfred P. Sloan Foundation, the William and Flora Hewlett Foundation and the Institute for New Economic Thinking (INET).

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Correspondence to L. Mattauch.

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Funke, F., Mattauch, L., Douenne, T. et al. Supporting carbon pricing when interest rates are higher. Nat. Clim. Chang. 14, 665–667 (2024).

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