Vanessa Ludden

October 27, 2021

New report: The social impacts of climate mitigation policies

A new Ramboll report summarises the social impacts and inequality outcomes of climate mitigation policies. If not addressed properly, energy efficiency and the promotion of renewable energy sources in the EU will put additional pressure on low-income households. 

By Nikolas Rønholt
Due to growing concerns over the climate crisis, the EU has set ambitious measures and goals to fight climate change. It has done so by introducing several policy packages and committing to achieve ambitious targets going forward.
However, as economies shift towards more sustainable production and consumption patterns to mitigate the effects of climate change, the social and economic costs necessary to complete such a transition become more apparent. A new Ramboll report shed light on the topic by analysing policies in the energy sector.
Lower-income households hit harder
Many climate mitigation policies in the energy sector are likely to result in negative distributional outcomes when seeking to achieve their targets, the report concludes. Ramboll’s just transition expert Vanessa Ludden explains:
- For instance, we can see that several climate mitigation policies aim to lower the energy demand by raising energy prices. While this might be a wise move from a climate action point-of-view, lower-income households will be hit harder as they use a larger share of their income on energy expenses.
- What is more, economic and social inequalities resulting from climate mitigation policies are likely to increase if additional policies are targeted at services that take up a larger share of poor households’ disposable income.
This should not discourage the implementation of climate mitigation efforts, states Vanessa Ludden, but rather encourage the integration of social concerns into environmental policies. In fact, a combination of climate mitigation and social policies is key to ensuring that policy-makers meet environmental goals and mitigate regressive distributional outcomes.
Policies for a just transition
Ramboll’s new report marks the conclusion of a study done for the European Environment Agency entitled “The social impacts and inequality outcomes of climate mitigation policies”.
The overall objective of the study was to produce evidence-based knowledge to support the design and implementation of climate change mitigation policies compatible with a just transition to a low and neutral carbon economy in the EU.
To make this happen, Ramboll’s team of experts developed an analytical framework to summarise the pathways leading to unequal outcomes following the introduction of climate mitigation policies in the energy sector. The framework was applied to seven case studies focusing on different types of energy-related policies in selected EU Member States.
Local context essential
The study findings indicate that the impacts of climate mitigation policies and the distribution of their costs and benefits heavily depend on contextual factors (regional characteristics; household location; disposable income) and identity markers (age; gender; dis(ability)). As an example, women are particularly affected by carbon pricing measures as they represent 85% of single parent families.
Therefore, the design of climate mitigation policies, as well as the compensation measures to mitigate their potential effects, should be deeply engrained in the local context, accounting for its social, economic, and demographic characteristics.
For more information on this topic, you can access the full report here.