Income distribution after the energy transition

We will illustrate our analysis with the case of the euro zone. Let us assume that carbon neutrality has been reached by 2050. This means that, depending on the carbon capture potential, the use of fossil energies will disappear between 2020 and 2050. We can also make the following assumptions: Energy prices will triple due to the intermittent nature of solar and wind power and the cost of storing electricity; Renewable energy production will be entirely carried out in the euro zone, whereas fossil fuel is largely imported. We then see that the surge in energy prices is not a problem in terms of income, since it fuels the euro zone's value added and not imports, and therefore that it increases the euro zone's nominal GDP: disposable income excluding energy purchases is not negatively affected.