Climate policies

The impacts of climate policies vary according to the geographical area and social group they target. Mitigating measures need therefore to be set in place in order to protect low-income population and vulnerable communities from uneven distributional effects.

To address this issue and outline several remedial solutions, Eurelectric just conducted a study, E-Quality: Shaping an inclusive energy transition, with the scientific contribution of Enel Foundation and in collaboration with Guidehouse and Cambridge Econometrics.

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Climate change
Enel Foundation’s work in depth

As the climate emergency was not put on hold by the current COVID-19 crisis, that prompted a potential 7% decrease of the EU GDP, a socially just and inclusive energy transition is paramount for bringing citizens on board and alleviating possible negative effects, while enhancing the positive ones especially on the low-income population.

“The new normal for all systems is characterised by climate change and rising inequality, lately magnified by the effects of COVID-19 crisis. We need to seize the moment and bounce back stronger thanks to an inclusive energy transition reinforced by a well-balanced package of decarbonisation policies. This study shows that it is certainly possible and of paramount importance for all”, said Carlo Papa, Managing Director of Enel Foundation.

By analysing concrete policies already implemented by administrations across the world, the study presents the key measures that can fully offset the regressive effects of climate policies, paving the way for a successful energy transition.

More specifically, the study identifies six decarbonisation policies (carbon pricing, taxation of energy vectors, emissions performance standards, subsidies for low-carbon technologies, phase out of subsidies for fossil fuels, energy efficiency measures) and made simulations based on them through a macroeconomic model, analysing the patterns of inequality for individual policy scenarios.

Additional measures to mitigate potential regressive effects were also taken into consideration, assessing the net distributive impacts of a wider combined policy package.

“Mitigating the negative social impacts of climate policies is essential to ensure broad support for the energy transition. This new study shows that negative effects can be fully offset with targeted policies and gives concrete examples of policies that can be considered for this purpose,” said Magnus Hall, Eurelectric’s President.

The main findings of the study were first presented at an online webinar hosted by Eurelectric on June 26.