Socially fair decarbonization pathways for housing and mobility: Insights from a multi-model analysis for Austria

The (supposed) regressivity of (primarily price-based) climate protection policy instruments often hampers an evidence-based discussion at the political level and is used as an argument against the implementation of corresponding measures. To assess the distributional implications of decarbonization, we developed climate policy scenarios for the buildings and mobility sectors including targeted compensation measures in close cooperation with stakeholders to identify socially acceptable pathways. Subsequently, three bottom-up sectoral models (for transport demand, vehicle choice and the building stock) were linked to a macroeconomic model to analyze the emission impact, the macroeconomic and distributional effects of the policy portfolios on different household types. The modeling of climate policy scenarios shows that decarbonization of housing and mobility in Austria by 2040 is achievable, but requires a comprehensive policy portfolio and rapid implementation. While climate policies have positive macroeconomic effects, they also exacerbate inequality between different income groups. Therefore, a just transition requires targeted compensation for low- and middle-income households, such as recycling of revenues from carbon pricing, to mitigate adverse effects on income distribution and enable investments in renovation and new heating systems.