Governance & Policy

Revenue Recycling

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Definition

Revenue recycling is the use of revenues raised by environmental pricing instruments — carbon taxes and auctioned emissions trading allowances — for defined public purposes: cuts to other taxes (the "double dividend" argument), lump-sum rebates or dividends to households, support for affected industries and low-income groups, or investment in clean energy, efficiency and adaptation.

References

openknowledge.worldbank.orgBulk import source

Source imported for editorial provenance.

Source organisationSupporting reference

This reference provides supporting context for how “Revenue Recycling” is defined and used.

Overview

How it is used

The concept structures carbon pricing design debates, distributional impact assessments, and just transition funding strategies linked to ETS and tax reforms.

Why it matters

Carbon pricing succeeds or fails on what happens to the money; revenue recycling is where climate policy meets the household budget.