AXA IM: Europeans the most worried on the economic consequences of the fight against climate change
This week, AXA Group Chief economist and Head of AXA IM Research Gilles Moëc focusses on the fact that COP28 is taking place against a background of emerging “decarbonation backlash”.
In the short history of climate change mitigation, there are already examples of countries such as Australia which completely reversed their policy, Moëc writes in his weekly Macrocast. Understanding citizens’ preferences – in particular their willingness to sacrifice purchasing power to the fight against climate change – is therefore key. Looking at the public opinion surveys conducted by the European Investment Bank.
Contrary to a popular opinion there does not seem to be any gap left between Europeans and Americans when it comes to considering climate change as a crucial issue. Across the Atlantic, the same percentage of respondents (39%) mention it as one of the three major challenges facing their countries in the coming years. Possibly counter-intuitively, it seems that climate sensitivity might have eroded somewhat in Europe over the last few years whereas it has remained unchanged in the US.
Europeans come out as more worried than Americans, Chinese or Indians on the economic consequences of the fight against climate change, with more concerns about its impact on employment, income, or social equality. They are also more circumspect about carbon taxes.
'We suspect a lot of this has to do with the fact that, relative to other constituencies, Europeans already pay significant environmentally related taxes. The European public already deals with some of the costs of decarbonation, while other constituencies have so far been largely spared. We think the Carbon Border Adjustment Mechanism, with the right narrative, may help to prevent a brewing political backlash,' Moëc explains.