What is the role of profit and luxury consumption in the ecological transition?

Abstract

Empirical evidence has demonstrated the essential role of income distribution and richer households’ consumption patterns in determining excessive consumption–generated greenhouse gas (GHG) emissions. To analyse this issue at the theoretical level, we employ the distinction between subsistence and luxury emissions and examine the connection between income distribution and environmentally wasteful emissions caused by luxury consumption. In our model, physical surplus production makes room for positive profitability. Income in the form of profits enables wasteful luxury consumption and boosts consumption–generated GHG emissions. We illustrate greener consumption, reformist and just transition scenarios to delineate social and environmental boundaries. Only the just transition scenario is found to be a viable option to respect both boundaries.