A carbon tax, like any flat tax, is regressive — by itself. However, the regressivity of a carbon tax can be minimized and even eliminated altogether by returning revenue in a way that protects the less affluent.
Wealthier households use more energy. They generally drive and fly more, have bigger (and sometimes multiple) houses, and buy more stuff that requires energy to manufacture and use. As a result, most carbon tax revenues will come from families of above-average means, along with corporations and government.
That explains how either of the two “return” approaches discussed in the prior section — carbon dividends and tax-shifting — can make carbon taxes income-progressive. Because income and energy consumption are strongly correlated, most poor households will get more back in their carbon dividends or via tax-shifting than they will pay in the carbon tax. The overall effect of a carbon tax could thus be equitable and even “progressive” (benefiting lower-earning households).