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(en) This paper examines how carbon pricing affects the welfare of energy vulnerable households in Belgium, distinguishing between energy poor (EP) households, who devote a large share of income to energy, and hidden energy poor (hEP) households, who severely restrict their consumption. Using eleven cross-sections of the Belgian Household Budget Survey (2003-2016), we characterise both groups through logistic regressions and estimate a demographically specified Quadratic Almost Ideal Demand System, developing a two-stage residual inclusion procedure to address the en-dogeneity of energy vulnerability status. The resulting group-specific price and budget elasticities are used to simulate the welfare impact of a carbon price on heating and transport fuels calibrated to the forthcoming EU ETS 2 (2028). Behavioural adjustments are heterogeneous: lower-income and energy vulnerable households exhibit higher fuel price elasticities than wealthier groups, with hEP households responding most strongly to price increases. The welfare analysis reveals that EP households face substantial carbon costs but comparatively modest welfare losses, whereas hEP households bear a disproportionate relative welfare burden despite their low expenditure-based exposure. These findings highlight horizontal equity concerns missed by income-based metrics and call for integrating energy vulnerability profiles and welfare measures into carbon pricing design.
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Coppens d’Eeckenbrugge, D., & De Bevere, A. (2026). Household Demand Responses to Carbon Pricing by Energy Poverty Status: Evidence from Belgium. https://dx.doi.org/10.2139/ssrn.7181472