Skip to main content

Thank you for visiting nature.com. You are using a browser version with limited support for CSS. To obtain the best experience, we recommend you use a more up to date browser (or turn off compatibility mode in Internet Explorer). In the meantime, to ensure continued support, we are displaying the site without styles and JavaScript.

  • Comment
  • Published:

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.

This is a preview of subscription content, access via your institution

Access options

Buy this article

Prices may be subject to local taxes which are calculated during checkout

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

References

  1. Dechezleprêtre, A. et al. Fighting Climate Change: International Attitudes Toward Climate Policies NBER Working Paper 30265 (National Bureau of Economic Research, 2022); https://doi.org/10.3386/w30265

  2. Stern, N. & Stiglitz, J. Report of the High-Level Commission on Carbon Prices (Carbon Pricing Leadership Coalition, 2017).

  3. Monnet, E. & van’t Klooster, J. Using Green Credit Policy to Bring Down Inflation: What Central Bankers Can Learn From History The INSPIRE Sustainable Banking Toolbox, Policy Briefing Paper 13 (INSPIRE, 2023); https://go.nature.com/4athTOU

  4. Konradt, M. & Weder di Mauro, B. J. Eur. Econ. Assoc. 21, 2518–2546 (2023).

    Article  Google Scholar 

  5. Klenert, D. et al. Nat. Clim. Change 8, 669–677 (2018).

    Article  CAS  Google Scholar 

  6. Dolphin, G., Pahle, M., Burtraw, D. & Kosch, M. Nat. Clim. Change 13, 1033–1041 (2023).

    Article  Google Scholar 

  7. Fabre, A., Douenne, T. & Mattauch, L. International Attitudes Towards Global Policies Berlin School of Economics Discussion Paper Number 22 (Hertie School, 2023); https://doi.org/10.48462/opus4-5024

  8. Baranzini, A. & Carattini, S. Environ. Econ. Policy Stud. 19, 197–227 (2017).

    Article  Google Scholar 

  9. Kotchen, M. J., Turk, Z. M. & Leiserowitz, A. A. Environ. Res. Lett. 12, 94012 (2017).

    Article  Google Scholar 

  10. Kallbekken, S., Kroll, S. & Cherry, T. L. J. Environ. Econ. Manage. 62, 53–64 (2011).

    Article  Google Scholar 

  11. Funke, F., Mattauch, L., Douenne, T., Fabre, A. & Stiglitz, J. E. Supporting Carbon Pricing When Interest Rates Are Higher Berlin School of Economics Discussion Paper Number 38 (Hertie School, 2024); https://doi.org/10.48462/opus4-5388

  12. Mildenberger, M., Lachapelle, E., Harrison, K. & Stadelmann-Steffen, I. Nat. Clim. Change 12, 141–147 (2022).

    Article  Google Scholar 

  13. Giraudet, L.-G., Bourgeois, C. & Quirion, P. Energy Policy 151, 112140 (2021).

    Article  CAS  Google Scholar 

  14. Borenstein, S. & Davis, L. W. Tax Policy Econ. 30, 191–234 (2016).

    Article  Google Scholar 

  15. Allcott, H., Knittel, C. & Taubinsky, D. Am. Econ. Rev. 105, 187–191 (2015).

    Article  Google Scholar 

Download references

Acknowledgements

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).

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to L. Mattauch.

Ethics declarations

Competing interests

The authors declare no competing interests.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Funke, F., Mattauch, L., Douenne, T. et al. Supporting carbon pricing when interest rates are higher. Nat. Clim. Chang. 14, 665–667 (2024). https://doi.org/10.1038/s41558-024-02040-z

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1038/s41558-024-02040-z

Search

Quick links

Nature Briefing

Sign up for the Nature Briefing newsletter — what matters in science, free to your inbox daily.

Get the most important science stories of the day, free in your inbox. Sign up for Nature Briefing