Barrier to strict regulations: endless low wages

The potential for collective action in response to high renewable energy costs has not resulted in decisive global progress, primarily due to the persistent issue of growing inequalities. In particular, low-income households have resisted bearing a disproportionate share of the burden in addressing climate change and have voted accordingly.

Rising inequalities are disrupting efforts to transition away from fossil fuels through measures like carbon pricing, energy efficiency standards, and subsidies that are often seen as benefiting the wealthy. Many feel marginalized by these initiatives.

Low- and middle-income populations are unlikely to embrace the transition to clean energy or support carbon regulations unless they include compensation for the middle class, not just the poor. If these groups continue to bear the brunt of the burden, they may elect leaders who prioritize addressing inequality over tackling global warming.

Middle-class wages have remained stagnant for decades, while the incomes and wealth of the elite have consistently increased. The middle class seeks wage growth that matches rising income levels, rather than additional burdens from the green transition, which would further widen the income gap.

Inequality has been increasing since the 1970s. In the years ahead, low-income workers may encounter further difficulties due to intensifying international competition, the rise of robotics, and the emergence of AI (artificial intelligence). This trend is unsustainable.

Governments face a significant challenge: imposing additional carbon regulations that worsen inequalities could lead to electoral backlash. As of now, they have not yet identified a solution that accelerates the green transition without exacerbating existing disparities.

Energy costs represent a larger share of the budget for lower-income households. Consequently, any energy regulation aimed at combating global warming would disproportionately impact the poor compared to the wealthy.

“Energy burden” studies indicate that carbon regulations would place a heavier strain on the lower-middle class than on the affluent. This added burden exacerbates existing inequalities and contributes to the slow progress in the fight against global warming. While a small percentage of the upper-middle class may embrace green initiatives regardless of cost, the majority may resist, feeling unfairly burdened.

The poor cannot be sacrificed in the effort to combat global warming. Harsh regulations that accelerate the green transition at the expense of the poor are unsustainable. Such measures would likely be met with strong resistance, leading to the election of radical politicians who would roll back green regulations. This fear of political radicalization is a key factor in the ongoing inaction on global warming.