@@ -138,21 +138,21 @@ If this dual objective is taken seriously in European climate policy, then there
The average energy footprint of EU citizens was X GJ per capita in 2011 [oswald_large_2020] and the carbon footprint 8.2 tonnes CO2e per capita in 2007 [@ivanova_environmental_2016]. However, the differences in average energy and carbon footprints are large within and between different regions in the EU. Energy footprints ranged from X to Y GJ per capita in 2011 [@oswald_large_2020] and carbon footprints from below 2.5 tonnes CO2eq per capita to 55 tonnes CO2eq per capita in 2010 [@ivanova_unequal_2020]. Depending on the assumptions of different global mitigation scenarios, the average footprints need to be reduced to between 15.7 and 100 GJ per capita [@grubler_low_2018 @millward-hopkins_providing_2020] or 0.7 and 2.1 tCO2e per capita [@akenji_1.5-degree_2019] by 2050, respectively.
We assess under what conditions European energy inequality is compatible with the achievement of global climate goals and a decent standard of living following these steps. We first construct common European expenditure deciles based on national income stratified household expenditure data from EUROSTAT covering 28 European countries, further stratified by 5 consumption sectors. We then calculate average household GHG and energy footprints per European expenditure decile and consumption sector to explore the current structure of energy and carbon intensities across these categories. Based on these results, we use the current empirical per sector best technology to calculate a homogenized counterfactual European household energy demand distribution (and associated emissions) at current European consumption levels. We report energy and emissions savings per expenditure decile and country and relate the resulting energy demand to available supply across different global 1.5°C scenarios from the literature. Using assumptions on decent living energy demand and available energy supply from different 1.5°C scenarios show how the homogenized European energy demand distribution would need to be transformed (flattened) to conform to these constraints. We report exemplary implications for energy use in different expenditure deciles. Finally, we discuss implications for policy (GND, doughnut, carbon border adjustment mechanism for non-eu emissions).
Our unit of analysis through the paper is households normalized by adult equivalent unit, following the income stratified households expenditure data from EUROSTAT. The adult equivalent units from EUROSTAT adjust for household size in different countries and income groups for comparability purposes. When we discuss our household GHG and energy footprints per European expenditure decile in the context of decarbonization scenarios, we adjust total final energy use per capita output from the scenarios to household final energy use per adult equivalent unit. As inequality measure through the study, we divide the average value of the population in the top decile by that of the bottom decile, a 10:10 ratio. For example, in expenditure, a 10:10 ratio of 5 means that adult equivalent units in the top decile spend 5 times more on average than those in the bottom decile.
We assess under what conditions European energy inequality is compatible with the achievement of global climate goals and a decent standard of living following these steps. We first construct common European expenditure deciles based on national income stratified household expenditure data from EUROSTAT covering 28 European countries, further stratified by 5 consumption sectors. We then calculate average household energy and carbon footprints per European expenditure decile and consumption sector to explore the current structure of energy and carbon intensities across these categories. Based on these results, we use the current empirical per sector best technology to calculate a homogenized counterfactual European household energy demand distribution (and associated emissions) at current European consumption levels. We report energy and emissions savings per expenditure decile and country and relate the resulting energy demand to available supply across different global 1.5°C scenarios from the literature. Using assumptions on decent living energy demand and available energy supply from different 1.5°C scenarios show how the homogenized European energy demand distribution would need to be transformed (flattened) to conform to these constraints. We report exemplary implications for energy use in different expenditure deciles. Finally, we discuss implications for policy (GND, doughnut, carbon border adjustment mechanism for non-eu emissions).
# Materials and methods
We first decomposed national household final demand expenditure in the Environmentally-Extended Multi-Regional Input-Output (EE-MRIO) model EXIOBASE (version3, industry-by-industry) (ref), by income quintile, using European household budget survey (HBS) macro-data from EUROSTAT (ref). The EUROSTAT HBS publishes national data on mean consumption expenditure by income quintile (in purchasing power standard (PPS) euro) and the structure of consumption expenditure by income quintile and COICOP consumption category. We mapped the EXIOBASE sectors to one of the COICOP consumption categories (our mapping can be found in the SI), and used the relative shares of each COICOP consumption category between the income quintiles in the HBS to decompose the EXIOBASE national household final demand expenditure per sector by income quintile as well. We then multiplied this income-stratified EXIOBASE national household final demand expenditure by 'total' energy use and carbon intensities per EXIOBASE sector, calculated in EXIOBASE using standard input-output calculations, to estimate national household energy and carbon footprints stratified by income quintile.
The energy footprint is the gross total energy use energy extension in EXIOBASE, which converts final energy consumption in the IEA energy balance data from the territorial to residence principle following SEEA energy accounting (ref - Stadler et al.). The carbon footprint includes CO2, CH4, N2O, SF6, HFCs and PFCs, from combustion, non-combustion, agriculture and waste, but not land-use change. For both footprints, direct energy use and carbon emissions from households is included, with the total split between shelter, transport and manufactured goods using further data from EUROSTAT on this split.
The energy footprint is the gross total energy use energy extension in EXIOBASE, which converts final energy consumption in the IEA energy balance data from the territorial to residence principle following SEEA energy accounting (ref - Stadler et al.). The carbon footprint includes CO2, CH4, N2O, SF6, HFCs and PFCs, from combustion, non-combustion, agriculture and waste, but not land-use change. For both environmental footprints, direct energy use and carbon emissions from households is included, with the total split between shelter, transport and manufactured goods using further data from EUROSTAT on this split.
Finally, we aggregated the data of 28 European countries with 5 income groups each into 10 European expenditure groups, to decompose the total European household energy and carbon footprint by European expenditure decile, ranking each national income group according to their mean consumption expenditure in PPS. We call these European expenditure deciles, although only countries with EUROSTAT data from 2005 to 2015 are included, which excludes Italy and Luxembourg, but includes the UK, Norway and Turkey. Data on decarbonization scenarios, especially final energy use, is from the IIASA scenario database [ref], and work by Grubler et al. (2018) [ ] and Millward-Hopkins et al. (2020) [ ]. (IEA, Boell?)
Finally, we aggregated the data of 28 European countries with 5 income groups each into 10 European expenditure groups, to decompose the total European household energy and carbon footprint by European expenditure decile, ranking each national income group according to their mean consumption expenditure in PPS. We call these European expenditure deciles, although only countries with EUROSTAT data from 2005 to 2015 are included, which excludes Italy and Luxembourg, but includes the UK, Norway and Turkey. Data on decarbonization scenarios, especially final energy use, is from the IIASA scenario database [ref], and work by Grubler et al. (2018) [ ] and Millward-Hopkins et al. (2020) [ ]. (IEA, Boell?) All data and procedures are described in detail in the supplementary information (SI).
Our unit of analysis through the paper is households normalized by adult equivalent unit, following the income stratified households expenditure data from EUROSTAT. The adult equivalent units from EUROSTAT adjust for household size in different countries and income groups for comparability purposes. When we discuss our household energy and carbon footprints per European expenditure decile in the context of decarbonization scenarios, we adjust total final energy use per capita output from the scenarios to household final energy use per adult equivalent. As inequality measure through the study, we divide the average value of the population in the top decile by that of the bottom decile, a 10:10 ratio. For example, in expenditure, a 10:10 ratio of 5 means that adult equivalents in the top decile spend 5 times more on average than those in the bottom decile.All data and procedures are described in detail in the supplementary information (SI).
# Results
## Carbon-energy footprints are less unequal than expenditure levels
## Environmental footprints are less unequal than expenditure levels
Consumption-based indicators such as the energy and greenhouse gas footprint of households are largely determined by their spending levels. An inequality of household expenditures in a population therefore implies an inequality of their carbon-energy footprints. Figures 1a-c show European households by decile of expenditure and their associated footprints for GHGs and energy in 2015. The figures show that increasing expenditure generally translated into larger footprints, but that the inequality decreased from expenditure to energy to greenhouse gas emissions with 10:10 ratios (the top decile divided by the bottom decile) of `r exp_10_10`, `r energy_10_10` and `r co2eq_10_10`, respectively. Total expenditure ranged from `r exp_bottom_decile` trn€ to `r exp_top_decile` trn€ (or `r fd_pae_bottom_decile`€ to `r fd_pae_top_decile`€ per adult equivalent) across bottom and top decile, the energy footprint from `r energy_bottom_decile` EJ to `r energy_top_decile` EJ (or `r energy_pae_bottom_decile` GJ/ae to `r energy_pae_top_decile` GJ/ae), and the GHG footprint from `r co2eq_bottom_decile` MtCO2eq to `r co2eq_top_decile` MtCO2eq (or `r co2eq_pae_bottom_decile` tCO2eq/ae to `r co2eq_pae_top_decile` tCO2eq/ae). The reason for this is evident from figures 1d-f. Both the energy intensity measured as energy use per € expenditure (d) and the carbon intensity measured as GHGs per unit of energy use (f) gradually decrease from bottom to top expenditure decile. The average energy intensity of consumption decreased from `r mean_energy_intens_bottom_decile` MJ/€ in the bottom decile to less than half (`r mean_energy_intens_top_decile` MJ/€) in the top decile. Additionally, the GHG intensity of energy use was also higher in the bottom decile (`r mean_co2eq_of_energy_intens_bottom_decile` gCO2eq/TJ) compared to the top decile (`r mean_co2eq_of_energy_intens_top_decile` gCO2eq/TJ). There is a clear trend of decreasing intensities across expenditure deciles even though the variance in the lower deciles is much higher. The GHG intensity of consumption (figure 1e) combines the effects of the intensities of 1d and 1f. The higher GHG intensity of energy use is likely due to a larger share of emission intensive energy carriers in the energy system. The decreasing energy intensity per expenditure is due to either inefficient energy technologies or energy subsidies in poorer areas in Europe.
Consumption-based indicators such as the energy and carbon footprint of households are largely determined by their spending levels. An inequality of household expenditures in a population therefore implies an inequality of their environmental footprints. Figures 1a-c show European households by decile of expenditure and their associated footprints for energy and carbon in 2015. The figures show that increasing expenditure generally translated into larger footprints, but that the inequality decreased from expenditure to energy to carbon emissions with 10:10 ratios (the top decile divided by the bottom decile) of `r exp_10_10`, `r energy_10_10` and `r co2eq_10_10`, respectively. Total expenditure ranged from `r exp_bottom_decile` trn€ to `r exp_top_decile` trn€ (or `r fd_pae_bottom_decile`€ to `r fd_pae_top_decile`€ per adult equivalent) across bottom and top decile, the energy footprint from `r energy_bottom_decile` EJ to `r energy_top_decile` EJ (or `r energy_pae_bottom_decile` GJ/ae to `r energy_pae_top_decile` GJ/ae), and the carbon footprint from `r co2eq_bottom_decile` MtCO2eq to `r co2eq_top_decile` MtCO2eq (or `r co2eq_pae_bottom_decile` tCO2eq/ae to `r co2eq_pae_top_decile` tCO2eq/ae). The reason for this is evident from figures 1d-f. Both the energy intensity measured as energy use per € expenditure (d) and the carbon intensity measured as GHGs per unit of energy use (f) gradually decrease from bottom to top expenditure decile. The average energy intensity of consumption decreased from `r mean_energy_intens_bottom_decile` MJ/€ in the bottom decile to less than half (`r mean_energy_intens_top_decile` MJ/€) in the top decile. Additionally, the GHG intensity of energy use was also higher in the bottom decile (`r mean_co2eq_of_energy_intens_bottom_decile` gCO2eq/TJ) compared to the top decile (`r mean_co2eq_of_energy_intens_top_decile` gCO2eq/TJ). There is a clear trend of decreasing intensities across expenditure deciles even though the variance in the lower deciles is much higher. The GHG intensity of consumption (figure 1e) combines the effects of the intensities of 1d and 1f. The higher GHG intensity of energy use is likely due to a larger share of emission intensive energy carriers in the energy system. The decreasing energy intensity per expenditure is due to either inefficient energy technologies or energy subsidies in poorer areas in Europe.
```{r figure1, out.width="98%", fig.cap="Expenditure and carbon-energy footprints and intensities across European expenditure deciles. Total expenditures (a), energy footprint (b), and GHG footprint (c) per decile. Energy intensity as energy footprint per expenditure (d), GHG intensity as GHG footprint per expenditure (e), and GHG intensity as GHG footprint per energy footprint (f)."}
```{r figure1, out.width="98%", fig.cap="Expenditure and environmental footprints and intensities across European expenditure deciles. Total expenditures (a), energy footprint (b), and carbon footprint (c) per decile. Energy intensity as energy footprint per expenditure (d), carbon intensity as carbon footprint per expenditure (e), and carbon intensity as carbon footprint per energy footprint (f)."}
@@ -457,7 +457,7 @@ Our data show that both of these factors play a role \@ref(fig:figure2). Poorer
The tendency that the emission intensity for direct energy consumption decreases with increasing affluence can be observed at the global level (XXX) between countries and also applies within Europe. In some of the Eastern European countries, between 80% and 100% of the population belong to the four lowest European expenditure deciles. This compares to less than 20% of the population in the richer European countries (Scandinavia, Germany, France, Austria, the Netherlands, Belgium, the UK, and Ireland). Note here that our analysis is based on average expenditure data from five income groups at the national level. This aggregation cuts off the lower and upper ends of the respective national expenditure distributions (Supplementary Note and Map).
The high intensities in the bottom four European expenditure deciles can be attributed in large part to inefficient domestic energy supplies for heating and electricity generation in Poland, Bulgaria, the Czech Republic, and Romania. Poland alone was responsible for about 40% of total coal combustion for heat production in Europe in 2015 and had a higher average GHG intensity per MJ of heat delivered than both Europe and the world (XXX). These differences in specific energy and GHG intensities in basic services sectors (especially shelter) account for the smaller inequality between expenditure deciles in terms of carbon-energy footprints compared to raw expenditures.
The high intensities in the bottom four European expenditure deciles can be attributed in large part to inefficient domestic energy supplies for heating and electricity generation in Poland, Bulgaria, the Czech Republic, and Romania. Poland alone was responsible for about 40% of total coal combustion for heat production in Europe in 2015 and had a higher average GHG intensity per MJ of heat delivered than both Europe and the world (XXX). These differences in specific energy and carbon intensities in basic services sectors (especially shelter) account for the smaller inequality between expenditure deciles in terms of environmental footprints compared to raw expenditures.
In absolute terms, the various final consumption sectors contribute very differently to the total carbon-energy footprint of households (Figure 3). On average, shelter and transport are the two largest sectors, accounting for nearly two thirds of both footprints. However, there are big differences between the sectors when looking at the respective contributions in the expenditure quantiles. For shelter there is almost no difference (neither in GHG nor in energy footprint). Especially the lower four expenditure deciles have high GHG emissions, which can be explained by the extreme differences in intensity shown in Figure 2. Transport was the most unequal sector, with footprints `r transport_energy_10_10` times higher in the top decile compared to the bottom deciles (corroborating findings in [@ivanova_quantifying_2020] and [@oswald_large_2020]). Manufactured goods was the second most unequal consumption category (10:10 ratios around `r man_goods_energy_10_10` for both footprints), followed by services (10:10 ratios of `r services_co2eq_10_10` for GHGs and `r services_energy_10_10` for energy) and then food (10:10 ratios of `r food_energy_10_10` for both footprints).
In absolute terms, the various final consumption sectors contribute very differently to the total environmental footprint of households (Figure 3). On average, shelter and transport are the two largest sectors, accounting for nearly two thirds of both footprints. However, there are big differences between the sectors when looking at the respective contributions in the expenditure quantiles. For shelter there is almost no difference (neither in the carbon nor in the energy footprint). Especially the lower four expenditure deciles have high GHG emissions, which can be explained by the extreme differences in intensity shown in Figure 2. Transport was the most unequal sector, with footprints `r transport_energy_10_10` times higher in the top decile compared to the bottom deciles (corroborating findings in [@ivanova_quantifying_2020] and [@oswald_large_2020]). Manufactured goods was the second most unequal consumption category (10:10 ratios around `r man_goods_energy_10_10` for both footprints), followed by services (10:10 ratios of `r services_co2eq_10_10` for carbon and `r services_energy_10_10` for energy) and then food (10:10 ratios of `r food_energy_10_10` for both footprints).
```{r figure3, out.width="100%", fig.cap="Energy and GHG footprints by final demand sector and European expenditure decile in 2015 further broken down by emission source location."}
```{r figure3, out.width="100%", fig.cap="Energy and carbon footprints by final demand sector and European expenditure decile in 2015 further broken down by emission source location."}
Estimates of carbon-energy footprint inequality are increasingly being used to assign responsibility for climate change. At a global, regional, and within-country level, energy use and carbon emissions are often highly unequal [@piketty_carbon_2015 @kartha_carbon_2020 @gore_extreme_2015 @hubacek_global_2017-1 @ivanova_unequal_2020 @wiedenhofer_unequal_2017 @golley_income_2012 @steenolsen_carbon_2016 @weber_quantifying_2008 @hardadi_implications_2020 @oswald_large_2020]. The proposed solution is often a call to reduce the carbon-energy inequality by reducing over-consumption, especially by the richest at the top of the economic distribution, which would then also reduce the carbon-energy footprint, everything else held equal. Complicating this picture, however, is the fact that carbon-energy intensities of consumption usually differ between economic groups. This is due to different consumption baskets and different access to technology. That lower-income groups tend to have higher carbon-energy intensities is an important finding from the environmental Kuznet's curve literature [@berthe_mechanisms_2015 @scruggs_political_1998]. This finding has not yet been well integrated with the current carbon-energy footprint inequality literature, that focuses more on assigning responsibility based on aggregate carbon-energy footprint inequality.
Estimates of energy and carbon footprint inequality are increasingly being used to assign responsibility for climate change. At a global, regional, and within-country level, energy use and carbon emissions are often highly unequal [@piketty_carbon_2015 @kartha_carbon_2020 @gore_extreme_2015 @hubacek_global_2017-1 @ivanova_unequal_2020 @wiedenhofer_unequal_2017 @golley_income_2012 @steenolsen_carbon_2016 @weber_quantifying_2008 @hardadi_implications_2020 @oswald_large_2020]. The proposed solution is often a call to reduce the carbon or energy inequality by reducing over-consumption, especially by the richest at the top of the economic distribution, which would then also reduce the energy and carbon footprints, everything else held equal. Complicating this picture, however, is the fact that energy and carbon intensities of consumption usually differ between economic groups. This is due to different consumption baskets and different access to technology. That lower-income groups tend to have higher energy and carbon intensities is an important finding from the environmental Kuznet's curve literature [@berthe_mechanisms_2015 @scruggs_political_1998]. This finding has not yet been well integrated with the current carbon and energy footprint inequality literature, that focuses more on assigning responsibility based on aggregate energy and carbon footprint inequality.
In this study, we have found that, for Europe as a whole, lower-economic groups have higher carbon-energy intensities of consumption (although this is not necessarily true within each European country) [@sommer_carbon_2017 @kerkhof_determinants_200]. These higher intensities come almost entirely from domestic electricity production and heating/cooling for shelter, in a handful of Central and Eastern European countries. This is of course already an important focus of European climate policy, but reducing these intensities should be a major priority for investment fund allocation going forward, especially within a framework such as the EU's European Green Deal [@bianco_understanding_2019]. Efforts to break consumer lock-in to these high intensities must be occurring alongside any policies that seek to continue reducing intensities and aggregate consumption higher up the distribution. Bringing intensities of consumption for all economic groups in line with those of higher-economic groups in Europe with access to the cleanest and most efficient available technologies, would substantially reduce the European household carbon-energy footprint, everything else held equal. The unequal intensity structure hinders clear conclusions on carbon-energy footprint inequality. We have shown that in an important sector such as shelter, lower-economic groups have almost the same level of footprint as higher-economic groups despite a fraction of the expenditure, because of their higher intensities. This can then be misleading in terms of assigning responsibility for climate change. Bringing carbon-energy intensities of all economic groups in line with the top group, and thus removing the inequality in intensity structure, would reduce the carbon-energy footprint, all else held equal, but *increase* carbon-energy inequality. The reduction of carbon-energy inequality is not a meaningful goal by itself.
In this study, we have found that, for Europe as a whole, lower-economic groups have higher energy and carbon intensities of consumption (although this is not necessarily true within each European country) [@sommer_carbon_2017 @kerkhof_determinants_200]. These higher intensities come almost entirely from domestic electricity production and heating/cooling for shelter, in a handful of Central and Eastern European countries. This is of course already an important focus of European climate policy, but reducing these intensities should be a major priority for investment fund allocation going forward, especially within a framework such as the EU's European Green Deal [@bianco_understanding_2019]. Efforts to break consumer lock-in to these high intensities must be occurring alongside any policies that seek to continue reducing intensities and aggregate consumption higher up the distribution. Bringing intensities of consumption for all economic groups in line with those of higher-economic groups in Europe with access to the cleanest and most efficient available technologies, would substantially reduce the European household energy and carbon footprints, everything else held equal. The unequal intensity structure hinders clear conclusions on footprint inequality. We have shown that in an important sector such as shelter, lower-economic groups have almost the same level of footprint as higher-economic groups despite a fraction of the expenditure, because of their higher intensities. This can then be misleading in terms of assigning responsibility for climate change. Bringing energy and carbon intensities of all economic groups in line with the top group, and thus removing the inequality in intensity structure, would reduce the footprint, all else held equal, but *increase* energy and carbon inequality. The reduction of energy and carbon inequality is not a meaningful goal by itself.
At current European consumption inequality, reducing the European household carbon-energy footprint in line with 1.5°C decarbonisation scenarios could theoretically be achieved at the mean. Current consumption inequality becomes a barrier, however, to achieving both these scenario targets *and* providing minimum energy use (and minimum carbon in the short-term) for decent living to every European. At a global level, there is some concern that achieving sweeping poverty reduction in many regions of the world may put achieving global climate targets at risk (ref - Hubacek). In the European context, although less unequal than the globe as a whole, if/as lower-consumption groups increase their income and consumption, energy use and carbon emissions will increase if more efficient and cleaner technology is not adopted at a fast enough rate. Achieving an average per capita/adult equivalent unit energy use and carbon footprint in Europe, in scenarios that reach the Paris agreement goals, means either doing so at current consumption inequality levels and keeping lower-economic groups near or below minimum energy use levels for decent living, or reducing consumption inequality. We have shown that achieving both decarbonisation scenario targets *and* minimum energy use levels for decent living in Europe requires potentially drastic reductions in economic inequality, alongside the appropriate targeted climate-energy measures for the different economic groups and countries.
At current European consumption inequality, reducing the European household energy and carbon footprints in line with 1.5°C decarbonisation scenarios could theoretically be achieved at the mean. Current consumption inequality becomes a barrier, however, to achieving both these scenario targets *and* providing minimum energy use (and minimum carbon in the short-term) for decent living to every European. At a global level, there is some concern that achieving sweeping poverty reduction in many regions of the world may put achieving global climate targets at risk (ref - Hubacek). In the European context, although less unequal than the globe as a whole, if/as lower-consumption groups increase their income and consumption, energy use and carbon emissions will increase if more efficient and cleaner technology is not adopted at a fast enough rate. Achieving an average per capita/adult equivalent energy and carbon footprint in Europe, in scenarios that reach the Paris agreement goals, means either doing so at current consumption inequality levels and keeping lower-economic groups near or below minimum energy use levels for decent living, or reducing consumption inequality. We have shown that achieving both decarbonisation scenario targets *and* minimum energy use levels for decent living in Europe requires potentially drastic reductions in economic inequality, alongside the appropriate targeted climate-energy measures for the different economic groups and countries.
