Carbon Pricing in Europe Risks Political Backlash, Study Finds

Carbon pricing, particularly through the EU Emissions Trading System (EU ETS), has proven effective in reducing emissions across Europe but also leads to economic costs and political backlash, notably increasing support for extremist and Eurosceptic parties. The burden of these costs is distributed unevenly, with regions more reliant on emissions-intensive industries or with less skilled labor facing greater challenges. As the EU prepares to expand carbon pricing to new sectors, understanding these distributional and political dynamics is crucial for maintaining public support and ensuring just climate transitions.