Luxury Carbon Taxes on Household Consumption – A Comparative Study Across 88 Nations

Equitable climate policies are required for a just and rapid energy transition. Here we model a novel carbon tax design accounting for the distribution of household consumption and carbon footprints across 88 countries covering the global north and south. The policy distinguishes luxury and basic consumption and sets higher carbon prices for luxury. Luxury carbon taxes are progressive by design, even before redistributing revenue, and reduce emissions as effectively as a uniform carbon tax. The policy reduces yearly global household emissions by 6% compared to no policy and inequalities are reduced compared to no policy as well as compared to a uniform carbon tax. By 2050, the policy saves around 100 gigatonnes carbon-equivalents which is nearly one third of what is needed for households to remain within a 1.5 degree consistent climate pathway and 75% of what is needed to remain 2 degree consistent