The political consequences of climate ambition: evidence from Australia

Why do we observe a backlash against the green transition before it has substantially begun? I examine the political consequences of climate ambition by analysing how voters respond prospectively to proposed climate policies. I argue that 'potential losers' - those vulnerable to decarbonisation but not directly threatened by proposed policies - present a strategic dilemma for pro-climate parties: compensating them may be infeasible or inadvertently signal their vulnerability, yet ignoring them allows rivals to mobilise their opposition. I test this in Australia's 2019 federal election, when one major party campaigned on an ambitious climate agenda. Leveraging heterogeneity in Australia's coal industry, I estimate voters' responses in communities reliant on domestic ('actual losers') and export coal ('potential losers') in a difference-in-differences design. Uncompensated potential losers resoundingly rejected the pro-climate party, while compensated actual losers did not, revealing how heterogeneous exposure and party strategies interact to shape the political feasibility of climate action.