While the climate dividend is a relatively new idea, many economists and scientists claim it is an effective and fair way to get to zero carbon. In Slovakia, the total revenue from the sale of EUAs between 2021 and 2030 is estimated at €12,4 billion and so the question of how to best invest the auctioning revenues is crucial.
The Slovak Republic uses the collected revenue mainly for programmes and activities related to pollution reduction, waste and wastewater management. As living costs in Slovakia will surely increase as a result of carbon taxation, it is time to think of a way to give people something in return. Carbon dividend comes to play as a transparent and simple tool that ensures vulnerable households are compensated for increased costs related to carbon pricing.
The advantage of a carbon dividend scheme is that it addresses energy poverty and income inequality. The tool also requires low governmental involvement and it is an appealing policy which would gather both public and political support. It has a potential to gather support for low carbon transition, as financial support such as grants is less visible to citizens and its association with carbon pricing is less evident.
In this study, the author Jan Svoboda suggests an effective model for Slovakia would be distributing 40% of auctioning proceeds to all Slovak residents which would translate to around €127 per person per year on average between 2021 and 2030. The rest should be going to the Environment Fund of the Slovak Republic, to programmes dedicated to energy efficiency and deployment of renewable energy systems in households, to the Green Innovations Fund while the rest may be used as compensation payments to energy-intensive industries at risk for carbon leakage.
The study was prepared for the Slovak MEP Martin Hojsík, member of the Renew Europe group and the party Progresívne Slovensko.