Conflicting Interests in Environmental Policy-making?

This paper focuses on possible conflicts of interests between the political aims of reduced emissions from energy consumption, redistribution of welfare and efficient policy-making. We use the results from a LES estimation to calculate the consumption reductions, compensating variations and excess tax burdens of three different tax schemes: one linear and two non-linear. Unless the tax scheme is optimally designed to correct for externalities, there is a conflict of interests between the aims of reduced consumption and efficient policy-making. When ranking different tax schemes, there is a conflict between the aims of redistributing welfare and reduced consumption if we are concerned with the well-being of individual households, but not if we are concerned only with the mean household in different parts of the income distribution.