New research into the effectiveness of carbon taxes has found that they have an impact on both emissions and income inequality.

The study by the Economic and Social Research Institute estimates that if the carbon tax was increased by a further €30 per tonne, on top of the current €20 per tonne, it would lead to a 3.9% reduction in carbon emissions.

An €80 per tonne rise, meanwhile, would lead to a 10.2% decrease.

The ESRI used data from the Central Statistics Office's Household Budget Survey as well as other statistical methods to simulate how much people would buy once a carbon tax was applied.

"What we did was look at historical data, so what we were looking at was what would happen under the status quo," said Muireann Lynch, research officer at the ESRI, who was speaking on RTÉ's Morning Ireland.

"This doesn't take into account ... other policy measures such as an improvement in public transport."

The study also found that while carbon taxes tend to have a more negative effect on the spending power of poorer households than richer ones, if the revenue raised is returned to households, this impact on income distribution can be corrected.

"We find that both methods do actually decrease income inequality, but the targeted mechanism decreases inequality more than the flat mechanism," Ms Lynch said. 

The report also said the existing tax and social welfare system is a more effective and cheaper way to recycle the revenues in a targeted manner to poorer households, rather than using a so-called 'carbon cheque' which would be more difficult to administer.

"You have to bear in mind that we have an existing tax and welfare system already," Ms Lynch said. "One way we could go about it is by using that existing system - you could do something with tax bands, tax credits and benefits, and that way you could direct it more towards the households that need it most."

While a flat payment to every household may seem more straight-forward, Ms Lynch said it would actually be an extremely complicated and costly undertaking. 

"We don't have a national register of households in the country, we don't know where everybody's primary register is, so we'd probably have to get everyone to sign up," she said. "And then you'd have to physically post a cheque, you'd be incurring bank charges and postal charges and that would actually decrease the total revenue you could give to people."

The ESRI said that further reductions in emissions could come from new policy measures, such as congestion charging or improved public transportation.

It said such measures would influence the degree to which consumers switch from high carbon consumption to lower carbon alternatives.

Commenting on the article, author Miguel Tovar Reaños said: "This research finds that environmental and distributional policy goals are not necessarily in conflict if the policy is designed correctly. Using Irish data, we confirm that carbon taxation is an effective way of reducing carbon emissions, which has been found to be the case in other jurisdictions worldwide."