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Heating Up Inequality? Socio-spatial impacts of ETS2 on European housing and cohesion

Author

Listed:
  • Schwab, Thomas
  • Hagemann, Sara
  • Többen, Johannes
  • Rhoden, Imke
  • Venghaus, Sandra
  • Linßen, Jochen

Abstract

ETS2 will introduce uniform EU-wide carbon pricing for heating, affecting about half of all households across the Union. Using a synthetic EU population of 188 million households, this study shows that most can absorb the additional costs, but a significant minority faces high burdens—especially in Eastern and Southern Europe. ETS2 revenues can cushion these impacts but are insufficient to fund large-scale heating system replacements. Targeted support and complementary investment policies are essential for a fair and effective transition.

Suggested Citation

  • Schwab, Thomas & Hagemann, Sara & Többen, Johannes & Rhoden, Imke & Venghaus, Sandra & Linßen, Jochen, 2026. "Heating Up Inequality? Socio-spatial impacts of ETS2 on European housing and cohesion," MPRA Paper 128005, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:128005
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    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • R28 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Government Policy

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