Emission inequality: Comparing the roles of income and wealth in Belgium and the United Kingdom

Many studies have investigated the distribution of greenhouse gas emissions associated with household consumption, highlighting that richer households have a substantially larger carbon footprint than poorer households. While these studies have typically used income or household expenditures as a proxy of households’ living standards, the association between emissions and wealth has hardly been studied. Wealth is not just an important component of households’ material living standards, known to be imperfectly correlated with income and expenditures, but it is also a very relevant dimension for climate policies. For instance, affluent households have more scope to invest in reducing emissions (e.g. insulation of their homes). Therefore, in this paper, we compare the inequality of emissions over wealth groups as well as groups defined by other living standard concepts such as income, expenditure and the joint distribution of income and wealth to add a focus on wealth to the analysis of emission inequality. Our study focuses on Belgium and the United Kingdom, which differ considerably in their level of wealth inequality. Our results highlight that the social distribution of emissions varies between expenditures, income, wealth and the joint distribution of income and wealth, with per capita emissions being more strongly associated with the joint distribution of income and wealth than with income alone. We also show that a significant share of households has both low income and low wealth, and may thus be lacking the means to prepare for a carbon-neutral future. Although increasing wealth taxation could provide much-needed revenues for low carbon investments, our results suggest that it would have a lower direct impact on the level of emissions and emission inequality compared to increasing taxes on high incomes.