Climate change is expected to exacerbate many of the world’s existing inequalities – both financial and social. And as many countries enact new energy policies, another gap is appearing: economic and social goals are often at odds with each other. Scientists and policymakers are therefore working to design policies that can be both economically efficient and socially progressive to ensure an energy transition that benefits everyone. The EU-funded CHANCE project explored best practices for the renewable energy transition, using comprehensive modelling and analysis of policies in two case studies where climate change, energy and trade are core to the political discourse. The team first analysed the social consequences of climate policies in the United States, then relations within EU Member States, with special attention on Spain. The aim was to find the factors that led to regressive or inefficient policies, and to guide policymakers towards better ones. CHANCE produced two studies published in peer-reviewed journals, while creating evidence-based results and conclusions to guide policymakers in Europe and around the world. “Studies such as those developed in this project – among others – demonstrate that it is possible to implement policies that ensure a just energy transition, and that we can move to a low-carbon economy without leaving anyone behind,” says Xaquín García-Muros, Marie Skłodowska-Curie fellow and postdoctoral researcher at the Basque Centre for Climate Change.
Incorporating household data to find the social impacts
The CHANCE project used a suite of models known as computable general equilibrium (CGE) models, which report on key economic indicators, such as GDP, prices, sector production and competitiveness. The limitation is that CGE models are often weaker on social analysis, usually missing social impacts of environmental policies. To overcome this issue, García-Muros and his colleagues linked CGE models with micromodels which integrate large amounts of individual household data. “Integrating this microdata allowed us to investigate climate policies in greater depth, and identify progressive measures with a reasonable loss of economic efficiency – or which are even more efficient,” explains García-Muros, lead researcher of CHANCE.
Through the CHANCE project, the team found that it is possible to design and implement climate policies that promote the transition to renewable energies, but don’t increase the gap between rich and poor households or make energy services more expensive. One key takeaway is that many climate policies generate income for governments that can be fed back into the economy. “Part of the revenue from climate measures can be used to compensate low-income households that are more vulnerable or prone to suffer from these policies,” says García-Muros. “The rest can be used to improve the economy, for example, by reducing other distortionary taxes or promoting energy efficiency measures,” he adds. Governments that seek to introduce environmental policies must show they can cut emissions equitably, in order for the public to support them, argues García-Muros: “Otherwise, climate mitigation measures will be rejected by public opinion, and attempts to tackle climate change will be unsuccessful.”
CHANCE, climate, energy, transition, just, policies, social, impacts