Unequal carbon tax impacts on 38 million German households: assessing spatial and socio-economic hotspots

Abstract Carbon pricing is a core climate policy in many countries. However, the distribution of impacts highly unequal across income brackets, but also household types and regions. The complex interplay between characteristics location specific factors such as building stock transport infrastructure considerably hampers our understanding inequality carbon taxes development remedial measures. In this paper, we simulate compensation on purchasing power more than 38 million German households living over 11.000 municipalities. We find that strength varies within groups (horizontal inequality) (vertical inequality), based demographic, socio-economic geographic factors. Without compensation, tax €50 per ton doubles number at risk becoming energy poor; majority them low-income families remotely located small medium cities. A lump sum payment €100 capita year reduces additional poverty substantially. Keywords: Taxes; Inequality; Energy Poverty; Germany; Microsimulation