The recent energy price peaks have called attention to how an accelerating low-emission transition ahead may have undesired distributional impacts. A key challenge is to design compensatory policies that do not set the transition nor other energy policy goals at risk. FAIRPOWER seeks to advance the scientific knowledge base relevant to this policy dilemma through 3 research steps.

Main outcomes of Work Package (WP) 1 will be scenarios for how the power markets respond to low-emission strategies. The case is Norway, who aims to substantially electrify the economy. The use of a multisectoral, multiregional macroeconomic model system will capture interrelated adaptations across all sectors, indirect power market feedbacks and Norwayʼs dependency on the EUʼs low-emission strategy, given their partly integrated power markets and common climate policies. The scenarios will reflect the uncertainty about how these international political and economic relations will evolve.

WP2 will investigate distributional impacts of the low-emission transition, both across income groups and across households distinguished by a variety of attributes within income groups, incl. region, job sector and heating equipment, household composition and residential characteristics. The research will methodologically go beyond state-of-the-art by building a microsimulation model with better data, more details and simultaneity. With the consistent macroeconomic scenarios as a backdrop, we will study distributional impacts of simultaneous changes affecting households through consumer prices, investment costs and income elements.

WP3 will use the results from WP1 and WP2 to analyse compensatory schemes. First, we will survey and analyse European recent compensatory policies. Based on this insight we will investigate how various designs can balance fairness concerns against the low-emission transition and other energy and climate policy goals in the Norwegian setting and under different scenarios.

Project period: 2023-2027