Indicators for equitable allocation of climate policy costs

The coalition agreement of the third Rutte government sets out a series of measures seeking to address climate change. Among the key measures are a higher energy tax on gas and a lower tax on electricity, with the rebate on that tax being decreased. A minimum CO2 price is also to be introduced in the electricity sector. Together, these measures are intended to make emissions more expensive – but by how much exactly?

In this study we identify the likely impacts of the various climate measures, considering two aspects:

  • Does the polluter pay? How much are companies and households paying per tonne CO2 emission under current climate policy? And how will that be affected by the measures cited in the coalition agreement?
  • Is that payment commensurate with financial capacity? What percentage of disposable income are households paying for climate policy; for companies, what percentage of their net turnover? This provides an indication of how the costs of climate policy are being shouldered by the parties in question.

For both aspects we analyse whether the burden will be distributed more or less equitably with introduction of the new measures, thus evaluating the cabinet’s policy in terms of the two main principles of relevance for just and fair climate policy: ‘the polluter pays’ principle and ‘the capacity-to-pay’ principle.