Equity in the energy transition: Who pays and who benefits?

With its pending Green Deal, the European Commission is striving to make Europe the first climate-neutral region by 2050. A lot is at stake with this goal. The transition to clean energy can help mitigate climate change and bring extensive social, health and well-being benefits to all Europeans. This process, however, is not without costs, particularly in the short term. With millions of people living in energy poverty in Europe, policymakers must ensure that these costs, as well as the benefits, are shared fairly among energy consumers.

By unpacking the market, regulatory and policy decisions that determine how costs are passed on through consumer bills, the authors of this report aim to demystify the distributional aspects and impacts on the energy poor. It is critical that the clean energy transition does not require greater expenditure from energy consumers affected by energy poverty.

The starting point for these guiding principles and policy recommendations is clear: Reducing energy demand through energy efficiency is the most cost-effective long-term solution to energy poverty. RAP also views the energy transition through a wider lens, recognising that climate ambition and social justice are interconnected. We need, therefore, methods for designing fair network tariffs, for ensuring levy-funded programme costs and benefits are distributed fairly, for using carbon pricing and taxes to deliver carbon savings for all, and for boosting consumer engagement in the energy transition. With thoughtful implementation, the clean energy transition can be delivered at least cost to society as a whole and to the benefit of all Europeans.