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Distributional and climate implications of policy responses to energy price shocks

Author

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  • Fetzer, Thiemo

    (University of Warwick)

  • Gazze, Ludovica

    (University of Warwick)

  • Bishop, Menna

    (University of Warwick)

Abstract

Which households are most affected by energy price shocks? What can we learn about the distributional implications of carbon taxes? How do interventions in energy markets affect these patterns? This paper introduces a measurement framework that leverages granular property-level data representing more than 50% of the English and Welsh housing stock. We use this ex-ante measurement framework to investigate these questions and set out an empirical evaluation framework to study the causal effects of the energy crisis more broadly. We find that the energy price shock has a more pronounced effect on relatively more affluent areas highlighting the likely progressive impact of carbon taxation. We document that commonly used untargeted interventions in energy markets significantly weaken market price signals for able-to-pay households. Alternative, more targeted policies are cheaper, easily implementable, and could better align energy saving incentives.

Suggested Citation

  • Fetzer, Thiemo & Gazze, Ludovica & Bishop, Menna, 2023. "Distributional and climate implications of policy responses to energy price shocks," The Warwick Economics Research Paper Series (TWERPS) 1467, University of Warwick, Department of Economics.
  • Handle: RePEc:wrk:warwec:1467
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    File URL: https://warwick.ac.uk/fac/soc/economics/research/workingpapers/2023/twerp_1467_-_gazze.pdf
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    Cited by:

    1. Fetzer, Thiemo & Shaw, Callum & Edenhofer, Jacob, 2024. "Informational Boundaries of the State," The Warwick Economics Research Paper Series (TWERPS) 1487, University of Warwick, Department of Economics.

    More about this item

    Keywords

    Energy crisis ; Carbon taxation ; Climate change ; Energy efficiency gap JEL codes: Q48 ; C55;
    All these keywords.

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