Household consumption patterns and income inequality in EU countries: Scenario analysis for a fair transition towards low-carbon economies

Abstract

The growing awareness of the current and future consequences of climate change has led to a range of international commitments aimed at ensuring sustainable development as part of the United Nations Framework Convention on Climate Change, and the Paris Agreement. These agreements reflect a concern of how to reduce carbon emissions and the pathway towards environmental improvement. Recent literature has pointed out the role of households as direct and indirect drivers of environmental impacts and as key agents in achieving low-carbon economies and climate-resilient development. Disparities in income distribution and lifestyles within and among countries, however, entail a different starting point for each country to reach sustainable pathways. The EU is fully committed to delivering on the United Nations 2030 Agenda and its implementation. Inequality continues to be a significant concern, reflected in the UN's Sustainable Development Goals. In this context, we explore the relationships between household consumption patterns in the EU, income inequality, and global carbon emissions trends, using an environmentally extended multiregional and multisectoral input-output model. We study the trends in global carbon emissions associated with the different household consumption patterns and income categories over 15 years, and evaluate the role of income distribution, consumption patterns, and technological conditions by country and income group. Additionally, we study, through certain scenarios, the potential achievement of double dividends, by alleviating poverty and reducing emissions.