Holistic approach needed to ensure vulnerable groups not left behind by climate policies

Holistic policy development at national, regional and local levels is required to ensure vulnerable groups are not left behind by policies needed to achieve climate neutrality in Europe. Although the climate-neutral objectives established at European and international levels – such as in the UN Sustainable Development Goals and the European Green Deal – are vital and will bring significant overall benefit, mitigating the sometimes regressive consequences of policy action required to achieve them will require buy-in and support from stakeholders across society. This is according to Eurofound’s new report on the Distributional impacts of climate policies in Europe.

While there is an urgent need to achieve a climate-neutral economy and benefit from the substantial economic, social and environmental dividends that this can bring, there are also undesirable distributional effects of climate policies on individuals, companies, communities and regions. In particular, measures such as carbon taxes can have regressive effects, negatively impacting people on lower income groups and therefore lowering these measures’ acceptability in society. 

The new report highlights that addressing energy poverty is essential in the context of energy transition and climate neutrality; that energy or fuel poverty is recognised as a severe problem in many Member States; and that this is mainly addressed through financial support. To ensure long-term sustainability, it recommends exploring alternative funding models, including grants for housing associations and local authorities to deliver energy-efficient upgrades to buildings, community municipal bonds, and green equity schemes.

The management of a just transition is supported by EU and national funds, which provide opportunities to take a comprehensive and systemic approach rather than single-point solutions to issues. Drawing up a plan that comprehensively addresses the future of industries and workers – such as those already being implemented in Ireland and Romania – would be another step towards holistic policy development and can offer new prospects to regional and national economies. The Just Transition Platform can be also further developed as an EU hub to share national experiences on climate measures beyond the Just Transition Mechanism. While also coordinating with other EU-level initiatives with similar goals, the knowledge to be shared could include, national or regional experiences with carbon taxes, industrial standards, or public investments.

Including all stakeholders – social partners, companies, NGOs and academia – in the design and implementation of climate policies is crucial to mitigate undesired effects, increase buy-in from all parties, and reap the multitude of benefits associated with the transition to climate neutrality. In this context, the European institutions have an important role to play in the involvement of stakeholders at national, regional and local levels through guidance and resources.

Download the report:

Eurofound: Distributional impacts of climate policies in Europe