Energy cost concerns as driver of carbon pricing opposition
As a result of the energy crisis triggered by Russia's invasion of Ukraine, 2023 was marked by an unprecedented rise in the price of heating fuels, particularly gas and oil. At the political level, the unforeseen events of the invasion and its impact on heating costs led to various crisis interventions by governments around the world, many of which were significant from a climate policy perspective. Using novel survey data from Germany, this study shows that experiencing economic hardship due to energy cost increases is associated with a significant decline in support for carbon pricing, which is widely regarded by economists as the flagship policy in the fight against climate change. The findings also highlight the potential for greater public awareness of relief measures to mitigate the adverse effects of emergencies. Consequently, relief programs aimed at mitigating the short-term financial burden of unexpected price spikes may be a second-best option for ensuring climate policy stability, despite their short-term negative impact on carbon emissions. In anticipation of the introduction of the EU Emissions Trading System II (ETS2), these findings underscore the need for a reassessment of the Social Climate Fund. In particular, there is a compelling case for the automatic triggering of direct relief measures in response to unprecedented short-term price fluctuations. This would serve to maintain public support not only for ETS2, but also for broader European climate policy.