… the incentives for and ability of providing fiscal stimulus to climate neutral development differ in size, direction and inter-temporally across social storylines. Shortsighted policy makers would see an incentive to foster the government directed (GDI) storyline, while in the longer-term policy makers would prefer the people powered (PPO) storyline.

The path towards climate-neutral energy systems affects public budgets through various channels. The government-directed (GDI) storyline implies larger public budgets by 2030 (relative to a market driven storyline, MDR) driven by larger revenues from CO2 pricing but lower budgets by 2050 due to reduced labour and commodity tax revenues. Contrary, the people-powered (PPO) storyline leads to smaller public budgets by 2030 due to lower revenues from CO2 pricing but higher budgets by 2050 due to positive employment effects inducing larger labour tax revenues.

Models used

SENTINEL case study

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