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Economists agree that carbon taxes are the most effective solution for climate change mitigation. But where do fossil fuel companies stand on carbon taxes? I analyse how the 100 largest oil and gas companies communicate on carbon taxes. Surprisingly, I find that 54% of companies that have a policy on carbon taxes support them (78% for the 50 largest). This is puzzling as an effective carbon tax should reduce the revenues and reserve value of fossil fuel companies. To understand this paradox, I offer non-mutually exclusive reasons why fossil fuel companies might support carbon taxes. Oil and gas companies could use a carbon tax to get rid of the competition from coal, create a level playing field and remove regulatory uncertainty. Or they think that these taxes will not affect them because demand for oil and gas is inelastic or that international coordination will fail and lead to leakages. Finally, it could be that this is simply a communication exercise. A carbon tax helps them shift the responsibility from fossil fuel companies to customers, voters and elected officials. [ABSTRACT FROM AUTHOR]

It is argued that the political feasibility of climate mitigation policies depends heavily on their distributional effects. This paper therefore studies the distributional effects of the European Commission's Fit-for-55 package at the household level in seven EU countries, analyzing a carbon tax on transport and heating fuels as well as variations of a lump-sum refund. Based on the resulting income distributions, different inequality measures are computed. The paper aims to extend previous methodological approaches by including inequality measures such as the Theil index and Atkinson index and comparing the results of carbon taxes on transport and heating fuels for seven EU countries in a consistent manner. I find that a household-size specific lump-sum refund not only mitigates the negative distributional effects of a carbon tax but also reduces overall inequality compared to the baseline scenario without a tax. [ABSTRACT FROM AUTHOR]