Ensuring fairness is essential in any carbon-pricing scheme
A carbon-pricing scheme should replace subsidy programs, with these subsidies gradually phased out as the green market matures[1].
Carbon pricing, which penalizes fossil fuel consumption by corporations, must be implemented with caution. Companies cannot rapidly transform their production processes, and sudden restrictions could lead to higher costs for consumers, potentially harming economic demand and employment. Low-income households, already burdened by persistently low wages[2], would be disproportionately impacted, as energy costs constitute a significant portion of their budgets[3].
Given these economic challenges, any carbon pricing strategy that unfairly burdens low-income households risks triggering a political backlash. Governments are particularly concerned about the potential rise of radical opposition from workers who have felt excluded from economic growth for decades.