Electrification, and especially the electrification of transport and domestic heating, imposes unjust costs on those least able to pay.

Nothing about electrification requires that costs be loaded on those least able to pay. Indeed, with appropriate policy design, efforts to electrify the economy could actually support low-income households and reduce inequality.

Recent research into the social impacts of climate policy has shown that decarbonisation policies, like the electrification of transport and domestic heating, can be used to reduce inequality with appropriate policy design. In particular, measures can be designed specifically to target low-income households and funded using mechanisms that avoid taxes or charges on essential goods like electricity. Policy measures can also be paired with compensating changes to tax policy to ensure that effective climate policies don’t disadvantage vulnerable groups. Numerous practical examples of this approach already exist in the context of energy efficiency policy, with households in receipt of social welfare often eligible for additional support. Such approaches could be readily adapted to ensure that electrification helps the poorest households. Put simply, how the costs and benefits of electrification are distributed is ultimately a question of policy and the options already exist to ensure that electrification benefits low-income families and reduces inequality.

Reference:

Georg Zachmann, Gustav Fredriksson, and Grégory Claeys, “The Distributional Effects of Climate Policies” (Brussels: Bruegel, 2018), https://www.bruegel.org/wp-content/uploads/2018/11/Bruegel_Blueprint_28_final1.pdf