May 2023

IZA DP No. 16114: Socioeconomic Inequality in Low-Carbon Technology Adoption

The widespread consumer adoption of low-carbon technologies (LCTs) is a cornerstone of net zero targets worldwide, however LCTs may not be equally distributed across socioeconomic characteristics. Our paper contributes to the literature by exploring socioeconomic inequality in LCT adoption and its underlying sources. We exploit nationally representative longitudinal data on the adoption of three key LCTs (solar photovoltaics, solar heating, and electric vehicles) in the UK. We investigate the aggregate role of predetermined socio-economic factors (including family background) in determining socioeconomic inequalities in LCT adoption. We further contribute to the literature by employing Shapley-decomposition techniques to reveal the relative contribution of each socioeconomic factor to the total estimated socioeconomic inequality. Our results suggest that socioeconomic inequalities in LCT adoption have fallen over the last decade but remained prevalent and highly significant. Analysis on longitudinal LCT adoption patterns shows that those following transitory LCT adoption patterns, and especially those who have recently adopted LCTs, are contributing to the reduction in the observed socioeconomic inequalities over time. Policies targeting the most disadvantaged socioeconomic background groups are crucial to mitigate the observed inequalities, potentially holding back the low-carbon transition.