Global redistribution of income and household energy footprints: a computational thought experiment

Abstract

Non-technical summary Global income inequality and energy consumption inequality are related. High-income households consume more energy than low-income ones, and for different purposes. Here, we explore the global household energy consumption implications of global income redistribution. We show that global income inequality shapes not only inequalities of energy consumption but the quantity and composition of overall energy demand. Our results call for the inclusion of income distribution into energy system models, as well as into energy and climate policy. Technical summary Despite a rapidly growing number of studies on the relationship between inequality and energy, there is little research estimating the effect of income redistribution on energy demand. We contribute to this debate by proposing a simple but granular and data-driven model of the global income distribution and of global household energy consumption. We isolate the effect of income distribution on household energy consumption and move beyond the assumption of aggregate income–energy elasticities. First, we model expenditure as a function of income. Second, we determine budget shares of expenditure for a variety of products and services by employing product-granular income elasticities of demand. Subsequently, we apply consumption-based final energy intensities to product and services to obtain energy footprint accounts. Testing variants of the global income distribution, we find that the ‘energy costs’ of equity are small. Equitable and inequitable distributions of income, however, entail distinct structural change in energy system terms. In an equitable world, fewer people live in energy poverty and more energy is consumed for subsistence and necessities, instead of luxury and transport. Social media summary Equality in global income shifts household energy footprints towards subsistence, while inequality shifts them towards transport and luxury.