Income inequality in Canada is difficult to ignore. Over the past few decades, the share of income controlled by the very few has grown significantly, leaving the rest of the population struggling with stagnant wages and rising living costs. 

Recent reports from Statistics Canada paint a grim picture of inequality trends in the country. Following the COVID-19 pandemic, the income of the country’s top one per cent rose by nearly 10 per cent, while the lower half of the population suffered a net decline. Earlier last year, the agency reported the largest gap in income between high and low income households in the country since it began collecting this data in 1999.

Much has been written about the sources and consequences of inequality on health, happiness, social mobility and cohesion. But there is also a less-discussed but equally pressing issue—the connection between income inequality and carbon emissions.

As part of our broader research on the social drivers of the climate crisis, we set out to examine whether the concentration of income among the wealthiest Canadians contributes to rising CO2 emissions. Using data from Statistics Canada, we analyzed provincial-level carbon emissions and tax income data between 1997 and 2020.We accounted for various factors, including common measures of income inequality, such as the Gini coefficient and the income shares of the top five and 10 per cent of income earners.

Income Inequality Drives Carbon Emissions

Our findings reveal that income inequality—especially the share of income held by the top five and 10 per cent of income earners—is a significant driver of carbon emissions across Canada. Rising inequality, in other words, increases carbon emissions. 

In 2020, for instance, a one per cent increase in the income share of the top five per cent of earners would have resulted in an additional 708 kilotons (kt) of emissions across provinces in the short-term—the equivalent of nearly 154,000, gasoline-powered cars. Over the long run, that same one per cent increase would contribute to an additional 2,931 kt of emissions, or the equivalent to the annual emissions of over 637,000 cars.

We found a similar trend when looking at the income share of the top 10 per cent. A one per cent increase in their income share would lead to an increase of 885 kt of emissions in the short term, and 3,504 kt in the long run. This is equivalent to over 192,000 and nearly 762,000 cars, respectively. 

Broader measures of inequality, such as the commonly used Gini coefficient, showed less pronounced effects. This suggests that the concentration of income at the very top has a unique role in accelerating environmental degradation. This highlights a critical link between emissions and the power of the wealthy, not simply a higher propensity to emit based on income alone. 

In other words, enabling lower-income households to become wealthier does not necessarily result in a proportional rise in consumption and emissions. Policies aimed solely at supporting lower-income earners are insufficient unless policymakers simultaneously address the excessive concentration of income and wealth among the richest Canadians. Doing so would result in a significant reduction of carbon emissions without any change in behavior from most Canadians, while simultaneously achieving a more equal society.

The pattern holds true across provinces and economic sectors, as well as over time—which indicates that the link between income inequality and carbon emissions is neither region-specific nor industry-bound. Even external shocks such as the COVID-19 pandemic had minimal impact on the relationship.

The Social Dimensions of the Climate Crisis

The climate crisis is fundamentally a social issue. While policymakers frequently tout technological innovations such as electric vehicles (EVs), heat pumps, hydrogen fuel, and carbon capture as solutions, they cannot solve climate change if inequalities remain unaddressed. Many of these technological fixes may actually worsen inequality in the country without explicit policy direction—particularly given the ways that many technology-based fixes, like electric vehicles, also cause new types of environmental degradation.

Government incentives for EV purchases, for example, disproportionately benefit higher-income individuals who are more likely to afford these vehicles. Similarly, investments in high-tech solutions often divert public funds away from more equitable, community-based approaches to sustainability, such as improving public transportation and retrofitting buildings for energy efficiency. 

Despite subsidies, EVs, heat pumps, and other ‘green’ technologies remain prohibitively expensive for many Canadians. Expecting most households to invest in such technologies amid rising living costs and a severe housing crisis is both unrealistic and inequitable.

Given the clear link between income inequality and carbon emissions, it is imperative that both provincial and federal governments adopt policies aimed at curbing the concentration of income and wealth at the top. Tackling the climate crisis requires more than just technological advancements. It demands a concerted effort to reduce income inequality from Canada’s top earners while ensuring that the burden of environmental action does not fall disproportionately on lower-income households. 

Climate and social justice are two sides of the same coin, and any meaningful response to the climate emergency must address both. 

With federal elections on the horizon, voters, parties, and policymakers must recognize the deep interconnection of the affordability crisis and the climate crisis. These are not distinct issues but mutually reinforcing challenges that require coordinated, comprehensive solutions. Addressing income inequality is not only a matter of social justice. It is also a necessary step in curbing carbon emissions and protecting our environment for future generations.

The time for half-measures has long passed. Canada’s carbon emissions increased again in 2022, reaching  708 megatonnes. With only five years remaining to meet the federal government’s target of a 45 per cent reduction below 2005 levels by 2030 (approximately 342 megatonnes), the urgency for bold action has never been greater. And achieving this goal is still far from fully decarbonizing the economy.

Building a sustainable and equitable future will require far-reaching policies that tackle both inequality and environmental degradation head-on. Provincial governments, in particular, have a crucial role to play given their jurisdictional control over key areas such as energy, housing, and transportation.

Political leaders (including the next Prime Minister) must move beyond technocratic fixes and embrace a holistic approach to the climate crisis—one that prioritizes social equity and recognizes that environmental sustainability cannot be achieved without addressing the economic forces driving inequality. Only then can we hope to build a future that is not only greener but fairer for all.