Effects of green transition policy interventions on environmental sustainability and social wellbeing in EU countries and in 24 selected countries in the Global South
Authors:
Thomas Kopp (Justus-Liebig-University Giessen), Syeda Aimen Abbas (Justus-Liebig-University Giessen)
Abstract:
This case study examines the distributional and environmental impacts of the European Union’s green transition, addressing the gap in research that jointly considers social inequality and emission offshoring. While much of the literature on carbon leakage focuses on the EU Emission Trading Scheme (ETS) with inconclusive results, we employ the OECD’s Climate Actions and Policies Measurement Framework (CAPMF) and its Environmental Policy Stringency Index (EPSI), which captures over 100 policy variables, to analyse the broader effects of environmental policy. The central research question asks whether stricter climate policies in Europe simultaneously (a) exacerbate income inequality at home and (b) shift emissions abroad. The analysis relies on panel data from 1990–2022 for inequality, unemployment, social expenditures, and trade data from 2016–2023 to derive imported emissions. The results suggest that policy stringency raises pre-tax and post-tax inequality but not disposable inequality, highlighting the protective role of welfare states in the Just Transition. At the same time, stricter environmental policies increase imported emissions from the Global South to the EU. The case study provides a joint view on domestic and global dimensions of the Just Transition debate, revealing undesired side effects of the existing policies.
