Climate action with revenue recycling has benefits for poverty, inequality and well-being

Existing estimates of optimal climate policy ignore the possibility that carbon tax revenues could be used in a progressive way; model results therefore typically imply near-term action comes at some cost to poor. Using Nested Inequalities Climate Economy (NICE) model, we show an equal per capita refund implies achieving 2 °C target can pay large and immediate dividends for improving well-being, reducing inequality alleviating poverty. In calculation weighs benefits against costs mitigation, recommended is characterized by aggressive followed slower climb towards full decarbonization; this pattern—which driven revenue Laffer curve—prevents runaway warming while also preserving redistribution. Accounting these dynamics corrects long-standing bias strong literature. analyses often redistribution assume mitigation will burden poor short term. Integrated Assessment Model (IAM) estimation suggests such reduce inequality, alleviate poverty increase well-being globally.