Lump-sum vs. energy-efficiency subsidy recycling of carbon tax revenue in the residential sector: A French assessment

Empirical evidence suggests that carbon taxes are best accepted when their revenue is used to finance abatement measures. This recycling option has however received little attention in modelling assessments. With the aim of filling this gap, we assess impact French tax on energy use for residential heating and compare cost-effectiveness distributional impacts two options: lump-sum payment subsidies home retrofits. We do so using Res-IRF, an energy-economy model provides a highly detailed description housing features (single vs. multi-family, efficiency, fuel) key household characteristics (tenancy status, income). find options offset regressive comparable ways. Lump-sum particularly effective reducing inequalities between owner-occupiers tenants. In turn, subsidy saves increases comfort more cost-effectively. discussion, further point some advantages from both political administrative perspective.