Socioeconomic divide and environmental impact: how income inequality shapes energy and emissions patterns

Abstract Background Understanding the influence of economic inequality on energy consumption, greenhouse gas emissions, and the uptake of renewable energy is becoming increasingly important as the European Union (EU) intensifies its efforts towards climate neutrality and sustainable development. Despite recent shifts in the income distribution, persistent disparities among social groups remain a critical factor with respect to energy behaviour and environmental outcomes. This research article explores how income inequality affects per capita energy consumption, carbon dioxide emissions from energy use, and the share of renewable energy in the EU. Additionally, it examines how these variables relate to economic performance by using gross domestic product (GDP) as a benchmark. Results This study applies ordinary least squares (OLS) regression to panel data covering 27 EU member states for the period 1990–2023. The results reveal a U-shaped relationship between income inequality and energy consumption per capita. At moderate levels, inequality is associated with reduced energy use; however, beyond a certain threshold, greater inequality leads to increased energy consumption, which is driven primarily by the high demand from wealthy population segments. Furthermore, per capita energy consumption is a strong predictor of emissions, although the marginal impact weakens at higher consumption levels, thus suggesting diminishing returns. Renewable energy significantly helps decrease per capita emissions, but its effectiveness also marginally decreases as its share increases, thus indicating saturation effects. Diagnostic tests for autocorrelation, heteroskedasticity, and cross-sectional dependence confirm the statistical robustness and reliability of the model. Conclusions This study highlights the necessity of integrating social equity into climate and energy policy frameworks. Reducing income inequality can promote energy efficiency and reduce carbon emissions, thereby contributing to the EU’s dual objectives of environmental sustainability and inclusive economic growth. These findings suggest that energy transition policies are more effective when they are complemented by measures that address economic disparities. Future research should explore inequality thresholds that alter environmental impacts and identify policy synergies that maximize both climate and social outcomes.