The need for a just transition - emission trading systems and social inequality in the EU

The European Emission Trading Scheme (EU ETS), which has been in place since 2005, is a core element of the European Union’s climate policy. The system is widely considered a success, as emissions in EU member states have declined considerably in sectors covered by it. However, climate policy in the EU has come under increasing pressure in recent years. External pressures, such as the war on Ukraine and the related energy crisis, or rising geopolitical competition, are often mentioned as one main reason for this. The debate on the future of climate policy has paid less attention to internal effects, especially those related to the socially unequal impact of the EU ETS. In recent years, research into climate policy and social inequality has demonstrated that the current price-based approach disproportionately affects different sections of the population and exacerbates social inequality (Chancel, 2022; Chancel et al., 2022). Recent studies have thus highlighted the urgent need to address the distributional effects of the ETS (Expertenrat für Klimafragen 2025; Together for 1.5 2025). This is especially crucial given that the majority of the European population supports the transition to a more climate-friendly economy (European Commission, 2023), but approval hinges on whether implementation is considered 'just' (European Commission, 2023). Nevertheless, this issue remains inadequately addressed in current debates on reforming European climate policy. In this presentation, I will present the results of recent research on the EU ETS and social inequality, assess the expected effects of future climate policies, and provide an overview of proposals to address these issues, as put forward by political parties, think tanks and social movements.