Is there a conflict between reducing global income inequality and combating climate change?

by | Feb 15, 2018

The energy-increasing effect of lowering inequality is indeed a distraction.

Many researchers have examined this question, based largely on the observation that a dollar spent at higher income levels is in some countries less energy intensive than at lower income levels. That is, rich people, though they consume much more in total, spend additional income on services or can afford efficient goods, while the new middle class buy energy-intensive goods, like appliances and cars.

Many imagine China as a template for this type of fast growth. On the other hand, there are indeed many possible synergies as well – less inequality may cause lower growth overall from changes in social norms away from consumerism, or lead to more political action to combat climate change. These deeper connections are under-explored, which gives the studies of potential conflict undue attention.

A review by Rao and Min suggests that the energy-increasing effect of lowering inequality is indeed a distraction. This effect of the poor spending more energy-intensive dollars, known as “income elasticity of energy”, is examined at a global scale, considering scenarios of equitable income growth both within and between countries.

Within any country, given the slow pace that inequality typically evolves, even with the most extreme known income elasticity and reduction in country inequality, greenhouse gas emissions would increase by less than 8 percent over a couple of decades. However, when one considers more equitable distribution of growth between countries, global emissions growth may decrease when compared to growth that occurs more in industrialized countries. This is because poorer countries have more potential for technological advancements that reduce the energy intensity of growth than do richer countries. That is, more income growth in poorer countries gives more opportunity for efficiency improvements, which influence the emissions of very large populations. Furthermore, China is a poor model for poor countries at large, many of which have relatively low energy intensities even today.


Kindly contributed by Narasimha Rao.