Low income households, with heads aged 35 to 45, limited education, living in rural areas and larger families, face a future where ecological and regulatory measures could raise the price of the most polluting goods and services. This sketch of a scenario shows how the ecological transition aims to reach carbon neutrality by 2050 while also affecting household budgets and overall progress toward environmental goals in Spain and comparable economies in North America.
In its study Spanish economy facing climate challenge, the Bank of Spain notes gaps in measuring the short term effects of slower economic growth against the commitments of ecological transition. “It’s not that we avoid stating the economic impact,” said the General Manager of Economy and Statistics, Ángel Gavilan, during the presentation of ongoing analysis. The organization plans to publish further annual findings soon. Inflationary effects and rapid shifts in policy are acknowledged, yet many specifics remain to be clarified in the near term.
Gavilan outlined a portrait of households and productive sectors that are most exposed to the ecological transition. The analysis identifies groups that should be the focus of compensatory policies meant to cushion transition costs without widening inequality.
Different consumption patterns
Eurostat data from 2019 show household activities, especially transport and heating, contributing about 20.9 percent of greenhouse gas emissions in Spain. Using microdata from the Family Budget Survey, the Bank of Spain estimates that the average CO2 cost per €1,000 spent by Spanish families was 281 kilograms in 2020. That figure is 6 percent lower than in 2012 and three times lower than the average for a typical American household, illustrating substantial cross-country differences in spending patterns and emissions intensity.
Researchers note that physical and transitional climate risks affect individuals differently based on place of residence, health, age, education, income, and other factors. The analysis accounts for home energy consumption—electricity, gas, air conditioning—and transport as well as expenditures on food, beverages, tobacco, and other goods and services across various household profiles. It also estimates emissions intensity per euro spent by each profile.
Compensation
There are clear signs that households experience the ecological transition unevenly. In particular, predictable price increases for the most polluting goods and services are likely to hit low-income households, households led by someone aged 35 to 45, rural residents, those with lower education levels, and larger families hardest. Temporary measures to cushion these costs could help maintain social cohesion while the economy undertakes deep structural transformation.
The Bank of Spain argues for policy mechanisms that provide targeted compensation to the most vulnerable groups. This approach seeks to balance social justice with the need to preserve social peace as the economy and society undertake substantial changes in the coming years to meet climate challenges.
economic sectors
Compensatory measures should be designed for sectors, firms, and households most affected. These policies should be highly targeted, adaptable, and funded in part by environmental revenue. The bank notes that roughly seven tenths of emissions come from agriculture, livestock, fishing, transport, and the electricity and gas sectors, yet these areas account for less than a quarter of gross value added. Conversely, sectors such as construction, food processing, lodging, and tourism have lower direct emissions but contribute a larger footprint through links to other more polluting sectors.
Under scenarios of renewed emission rights increases, a three-year GDP decline of about 0.6 points could rise to around 1.3 points if the system extends across all productive sectors. The most affected after energy would be non-metallic mineral products, air transport, paper, maritime transport, and agriculture, livestock, and fisheries sectors. The Bank of Spain emphasizes the need to anticipate these shifts and plan accordingly. [Source: Bank of Spain analysis]