The Income Distribution Impact of Decarbonization in Greece: an Initial Approach

Greece is one of the first European countries that was committed to decarbonize its energy sector by 2028 in the framework of the European Green Deal. However, this rapid and abrupt phase-out of coal-powered electricity raises concerns over the distributional consequences on the Greek households. The transition to clean technology is associated with higher costs, expected to primarily burden the local economy of the coal-producing areas, while the financial support provided by the Just Transition Mechanism is considered insufficient to deal with the negative socio-economic impacts of the lignite phase-out policy. The environmental policies and economic instruments that have been proposed to mitigate the expected side effects on income distribution are considered to be vague, inadequate, and insufficient. The paper aims to shed light on the—neglected—potential impacts of the delignitization policies on income distribution, at both the trans-European, inter-regional, and intra-regional levels, and suggests that governments and policy makers should not neglect the distributional impacts of the policies they apply.