Carbon pricing and fossil fuel subsidy removal are very effective policies to reduce carbon emissions. They are, in the view of the OECD, an indispensable core element of effective climate policy.
At the same time, the claim that higher energy prices would hit poor or lower income households particularly hard often leads to strong opposition when governments aim to introduce or increase carbon pricing and remove fossil fuel subsidies.
Starting from the evidence on the direct impacts of higher energy prices and lower energy subsidies, the panel identified best practices for overcoming any adverse equity impacts.
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