Structural Determinants of Household Vulnerability to ETS2 Carbon Pricing in the EU: Implications for a Sustainable Energy Transition

The extension of the European Union Emissions Trading System to buildings and road transport (ETS2) raises important questions about the distribution of carbon pricing burdens across Member States. While existing research has primarily focused on income differences or household typologies, the structural heterogeneity of vulnerability across EU countries remains insufficiently explored. This study develops a dual-channel framework of household vulnerability to ETS2, distinguishing between structural carbon exposure and socio-economic sensitivity. Using a balanced panel of 27 EU Member States over 2010–2024, we construct composite indices based on Eurostat data and combine cluster analysis, sigma-convergence tests, and two-way fixed-effects models with Driscoll–Kraay standard errors. The results suggest that the two vulnerability channels are empirically distinct and geographically differentiated across Member States, with no country group simultaneously characterized by high exposure and high sensitivity. Energy productivity and renewable energy expansion are associated with lower structural exposure but higher socio-economic sensitivity, consistent with a transitional burden mechanism. Over time, composite vulnerability exhibits statistically significant divergence, despite partial and uneven convergence across the underlying vulnerability dimensions. These findings highlight the need for differentiated compensation mechanisms and structural policy interventions that address both structural exposure and socio-economic sensitivity, supporting a socially equitable and sustainable energy transition under ETS2.