Equity impacts of energy and climate policy: who is shouldering the burden?

Abstract

Carbon pricing, technological supports, and energy subsidies comprise the mostoften implemented energy and climate policies. The cost of these policies has grown in recent years, resulting in equity impacts receiving greater attention by academics, policymakers, and the general public. While precise impacts are specific to particular circumstances, there are a number of primary channels through which energy and climate policies affect welfare. This paper gives an overview of how these channels operate. Where applicable, drivers of policy cost are outlined to show how these policies may grow to represent a meaningful welfare impact. Through case study analyses, we explain the most common mechanisms through which these policy costs drive equity outcomes. We review their implementation to date to give insight into the prevalence of these equity outcomes in an international context. Finally, we analyze the ability of remedial measures to counteract inequitable impacts.

Varieties of just transition: Public support in South Africa’s Mpumalanga coal community for different policy options

“…Take the case of carbon taxes which increase energy costs. Because energy costs constitute a high share of the budgets of low-income households, some groups view these taxes as regressive [72]. Other policies such as cap and trade are viewed as increasing pollution burdens in low-income communities [73].…”

Distributional concerns and public opinion: EV subsidies in the U.S. and Japan

“…One explanation is that the mass-level salience of distributional issues varies between energy transition policies or the framing of them. For example, when policies are discussed in terms of imposing costs, as in carbon tax policies that appear to hurt fossil fuel companies and regions, distributional issues might resonate more with the general public (Murray and Rivers, 2015;Farrell and Lyons, 2016;Tong et al, 2021). If so, the public might support revenue recycling from carbon taxes to alleviate the economic burden on communities directly hit by such tax policies.…”

Clean energy transition—our urgent challenge: an editorial assay

“…Among the energy technologies investigated in the journal, we identify several important topics: e.g., in wind power the issue of capacity value is important; or moving to more complex wind terrains with high wind potential, which have attracted much interest. On the policy side, we notice that improving emissions trading schemes, addressing equity issues, and funding energy innovation deserve more attention. As a new theme, we have introduced cyber security, which will become a highly important issue when digitizing energy systems and spreading the internet‐of‐things to energy devices and applications .…”