Energy poverty: addressing the problem from its definition

The term energy poverty (EP) alludes up to some extent to the word affordable in the Sustainable Development Goal 7: “affordable and clean energy for all”. Although there is a large share of countries which have achieved universal electricity access, EP is still a big inequality driver among the so-called Global North’s population. It is estimated that in Europe alone there is between 50 and 125 million people which are unable to afford proper indoor thermal comfort. Appropriate heat, cooling, lighting and energy to power household equipment are crucial services to guarantee a decent standard of living and the citizens’ health. Even though the term EP was first introduced during the development of the Third Energy Package in 2009 [1], only seven of the Member States reported having an official definition for EP within their jurisdiction in 2018 [2].

One of the biggest issues when talking EP is establishment of an accurate and inclusive definition. Efforts to define the term “fuel poverty” (FP) were already done in the beginning of the 80s [3], though it was not specifically defined until the publication of Boardman’s book in which the threshold for FP was defined for individuals whose fuel expenditure exceeded 10% of their income [4]. The 10% indicator has three main advantages: it is simple to calculate, easy to communicate, and relatively versatile from a pragmatic point of view [5]. However, it also undergoes a number of limitations. Moreover, just minor changes in how the definition is adopted can result in a radically different demography of EP, changing not only the numbers of people suffering EP, but also who they are [6]. In 2016 the EU Energy Poverty Observatory project commenced with the objective of generating transformational change in knowledge about the extent of EP in Europe, and innovative policies and practices to combat it. In the upcoming years, a number of indicators and definitions have been stablished. 

The report published by the INSIGHT-E Observatory in 2015 did an extensive review of the policies and measures which were carried out across the European countries. It included examples of successful and unsuccessful policies that had been adopted in different member states. This report and the EU Energy Poverty Observatory highlight the success of the French Policy Habiter Mieux “Living Better”. This plan includes a number of particularities that led to its success in alleviating the problem of EP in the long term. Two of them will be highlighted in this article: the focus on increasing energy efficiency in households and the attribution of the support using income criteria.

Some countries such as Bulgaria opted for financial assistance for families at risk of energy poverty. One of the biggest problems in the Bulgarian scenario is the low energy efficiency of households: many of today's buildings are poorly insulated. The financial support provided by the government to the citizens means a month-to-month alleviation, but it does not manage to solve the problem in a structural way. The INSIGHT-E Bulgaria review states that the measures taken fail in the identification and removal of the specific casual factors of EP [7]. The main focus of the French programme is to give energy efficiency "cheques" to vulnerable households. With these, they can carry out projects that increase the efficiency of buildings, either by buying more efficient appliances or by reducing thermal losses. Thus, the energy bill is reduced in the following months and the possibility that citizens will be able to pay their expenses by their own means increases. It should be mentioned that France also has financial aid programmes.

After the increase in energy and gas prices in the 2000s, the French law included energy as an essential good [8]. France has used the 10% indicator and thus defining the “Energy Effort Rate”, which is defined as the ratio between energy expenses and income of the household [8]. This definition was adopted due to the difficulty associated with quantifying the energy efficiency problem of all households in the nation. According to the definition of a vulnerable consumer, certain thresholds are established by which citizens are eligible for the “Living Better” program. This is a significant step forward at a time when more than one million people do not benefit from social tariffs, due to difficulties in the exchange of information between administrations and energy suppliers and the non-use of social assistance by several hundred thousand households [9].

Confronting the problem of EP brings many benefits, including less money spent by governments on health, reduced air pollution and improved household budgets [10], together with favouring economic development and enhancing gender equality [11]. The obligation of nations to alleviate this difficulty is clear, starting with creating as broad and inclusive a definition as possible. Also, ensuring an effective exchange of information between the stakeholders involved in order to guarantee that all vulnerable consumers are supported appropriately is also crucial. Once a definition is established, long-term plans must be made to address the problem at its root. 

Explanatory note: the example of Bulgaria's policies was used in the paragraph advocating one of the advantages of the French programme. This was done on the basis of INSIGHT-E reports that were published in 2015. These also mentioned the programme adopted by the Bulgarian government to improve the energy efficiency of residential buildings (referred as “National housing renewal program” in Ref. [7]). Despite this, the reports describe a big percentage of the population at risk of energy poverty in 2015. This programme was aimed to be developed between 2005 and 2020 so it would be useful to analyse the progress of this programme today and to see its impact on EP at national level.

Bibliography

[1] European Parliament, “Directive 2009/72/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC,” 2009.

[2] Agency for the Cooperation of Energy Regulators (ACER), “Annual Report on the Results of Monitoring the Internal Electricity and Natural Gas Markets in 2018 –Consumer Empowerment Volume,” 2019.

[3] J. Bradshaw and S. Hutton, “Social policy options and fuel poverty,” Journal of Economic Psychology, vol. 3, pp. 249-266, 1983. 

[4] B. Broadman, “Fuel Poverty: from cold homes to affordable warmth.,” Belhaven Press, 1991. 

[5] J. C. Romero, P. Linares and X. López, “The policy implications of energy poverty indicators.,” Energy Policy, no. 115, pp. 98-108, 2018. 

[6] R. Moore, “Definitions of fuel poverty: Implications for policy,” Energy Policy, vol. 49, pp. 19-26, 2012. 

[7] INSIGHT-E, “Appendix I. Vulnerable consumers and energy poverty in Member States. Bulgaria.,” 2015.

[8] INSIGHT-E, “Appendix I. Vulnerable consumers and energy poverty in Member States. France.,” 2015.

[9] L. Chancel and M. Saujot, “Le chèque-énergie: une mesure à perfectionner.,” Le Monde, 7 October 2014. 

[10] EU Energy Poverty Observatory, “What is energy poverty?,” 2020. [Online]. Available: https://www.energypoverty.eu/about/what-energy-poverty.

[11] 

M. Bazilian, S. Nakhooda and T. Van De Graaf, “Energy governance and poverty,” Energy Research and Social Science, vol. 1, pp. 217-225, 2014.