Asymmetric Effects of Carbon Pricing on Household Energy Poverty in Gulf Cooperation Council Economies

Abstract

Although there is a symmetric response in electricity prices to a symmetric change in the carbon price, carbon pricing can introduce asymmetric affordability challenges to households. A prospective expenditure-gap model is developed and the electricity component of the model is calibrated using the public generation data from Ember for all six Gulf Cooperation Council economies for 2026. A common observation year provides the benefit of not mixing national reporting years. Published emissions intensities are distinguished from assumed consumption, pass-through and affordability parameters in the analysis. Additional monthly electricity costs of USD 71.60 to USD 135.37 are generated by a fully transmitted carbon-equivalent charge of USD 50 per tonne at 3,000 kWh/month in the UAE and Bahrain, respectively. At 10% expenditure benchmark, the income-frontier moves from USD 716.00 to USD 1,353.72. A positive-part expenditure gap yields asymmetric changes in the vicinity of its threshold, even if there does not need to be asymmetric price transmission. Results indicate conditional energy-poverty prevalence and compensation needs, not energy-poverty prevalence nationally. Before interpreting the observed asymmetry, policy design should differentiate between threshold effects and tariff decisions and household income distributions.