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Conference Agenda

Overview and details of the sessions of this conference. Please select a date or location to show only sessions at that day or location. Please select a single session for detailed view (with abstracts and downloads if available).

Please note that all times are shown in the time zone of the conference. The current conference time is: 24th Aug 2026, 01:52:43am WEST

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Daily Overview

Session

Environmental Policies and Equity
Location: D-105
Session Chair: Laura Schürer, University of Oldenburg

Presentation 3

Carbon pricing of heating fuels: distributional effects in a microsimulation model with endogenous technology choice

Milan Jakob Reda¹, Erik Gawel^1,2, Paul Lehmann^1,2

1: Leipzig University, Germany; 2: Helmholtz-Centre for Environmental Research – UFZ, Leipzig, Germany

Discussant: Laura Schürer (University of Oldenburg)

Carbon pricing of essential energy services like heating is associated with concerns about the distributional effects on private households. Switching to low-carbon heating technologies such as heat pumps can relieve households of the burden of carbon pricing, but it is also associated with high upfront costs. This paper develops a microeconomic household model of carbon pricing with endogenous heating technology choice. Calibrating the model to German owner-occupier data, we study the distributional effects of carbon pricing with revenue recycling via lump-sum transfers and heat pump subsidies. We show that heat pump adoption slightly reduces the burden on households, but carbon pricing remains regressive. Moreover, it leads to less revenue available for compensating households. Therefore, redistributing revenues to households via lump-sum transfers -- in contrast to prior literature neglecting endogenous technology choice -- fails to yield a progressive distribution of welfare losses. Recycling revenues as heat pump subsidies further reduces revenues available for compensation by encouraging more households to switch to heat pumps such that regressivity is even more pronounced compared to lump-sum recycling. Our findings imply that achieving a progressive incidence of carbon pricing in the residential sector therefore may require a more targeted use of its revenues.