In order to combat energy poverty in low-income households more efficiently, this target group should be taken into greater consideration in energy efficiency policies. In a project undertaken for the Committee on Industry, Research and Energy (ITRE) of the European Parliament, SQ Consult (the Netherlands), the Fraunhofer Institute for Systems and Innovation Research (Germany) and the CITCEA group of the Universitat Politècnica de Catalunya (UPC, Spain) have presented proposals on how to better integrate low-income households into current energy efficiency policies. The study “Energy efficiency for low-income households” describes the positive influence of improving energy efficiency in low-income households and in the economy in general.
The high costs of energy represent a poverty risk for low-income households, either because they must spend too large a proportion of their income on energy supplies or simply because they can no longer afford to pay for energy. To combat what is known as energy poverty, without losing sight of the overall objectives of energy and climate policy, we need to find the right balance between energy efficiency measures and social policies.
One of the greatest challenges is that energy efficiency policies and social policies have different horizons and time-scales. Although social policies are mainly focused on easing financial difficulties in the short-term, energy efficiency policies also have positive environmental, economic and social effects in the mid- to long-term. In addition, it is essential that all end users, including low-income households, attain suitable levels of energy efficiency to meet Europe’s ambitious energy and climate targets.
To tackle these challenges specifically, the European Parliament commissioned SQ Consult, the Fraunhofer Insitute for Systems and Innovation Research and the Center of Technological Innovation in Static Converters and Drives (CITCEA) of the Universitat Politècnica de Catalunya (Spain) to examine the opportunity provided by energy efficiency for low-income households, and to draw up proposals on how to design energy efficiency policies for this specific group.
Better health and greater social inclusion
The study “Energy efficiency for low-income households” describes the most important, positive effects that energy efficiency improvements have in low-income households, apart from the obvious reduction in energy consumption and associated expenses. One of these positive effects is an improvement in well-being and health, as well as maintenance of the value of the property in the building. In addition, due to lower energy bills, households have a bigger budget for other domestic expenditure, and therefore have an opportunity for greater social inclusion.
These positive effects can only be obtained if the specific barriers in low-income households are removed so that the measures can be introduced. These barriers include a lack of capital for investment in energy efficiency, a lack of or insufficient information, and the dilemma of landlord and tenant.
Measures to support energy efficiency can eliminate investment barriers, but the typical barriers that affect low-income households can only be removed if this group is addressed directly with specific policies.
Seeking a balance between energy efficiency and social policies
The EU political framework considers the need to combine energy efficiency policies with social policies to fight against energy poverty. However, it does not explain how these measures should be integrated into the specific regulations of the EU and its member states. Finding the right balance between energy efficiency and social policies is one of the greatest challenges to effectively combat energy poverty.
To date, only a few EU member states have applied specific measures to promote energy efficiency in low-income households. One of the main study recommendations is to design energy efficiency measures that take into account both the specific barriers that affect low-income households and the additional social or economic impacts that energy efficiency could have on this target group.
Recommended political actions
In this study, six general recommendations are proposed, each one with specific suggestions for the different EU directives. These recommendations are:
- Draw up common definitions of vulnerable consumers and energy poverty to help to standardise policies and increase political visibility, but leave state members with the freedom to adapt these definitions to take into account differences between countries or regions.
- Define EU targets on energy and climate in relevant legislation that addresses all the end user groups equally, including those that are most vulnerable. Continuous monitoring and requirements to notify whether these objectives have been met could help to ensure that this kind of policies also reach low-income households.
- Ensure that the many benefits of energy efficiency are communicated in a proactive way to educate society on the positive effects that they could provide, such as better health and well-being.
- Tackle specific barriers that affect low-income homes in EU legislation and by member states in their strategic plans for renovating buildings.
- Allow member states to find the best balance between energy efficiency policies and social measures to eradicate or reduce energy poverty due to the great differences between them.
- Use funding from European social funds, investments funds or infrastructure funds from other sectors that benefit from the impacts of energy efficiency, such as health and social welfare funds, to be considered as an alternative or a source of additional funding.