SQ consult. Sustainable quality
  Stronger consideration of energy poverty in energy efficiency policy  
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In order to make more effective the fight against energy poverty in low-income households, it is proposed to consider this target group more strongly in energy efficiency policy. Commissioned by the ITRE Committee at the European Parliament, SQ Consult, the Fraunhofer Institute for Systems and Innovation Research and the Universitat Politècnica de Catalunya have put forward proposals for how to better integrate low-income households in current energy efficiency policy. The study “Energy Efficiency for Low-Income Households” describes the positive influences of improving energy efficiency on both low-income households and the economy as a whole.

 
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High energy costs represent a poverty risk for low-income households in particular – because they have to spend too much of their income on energy or because they can no longer afford to pay these costs at all. To combat energy poverty while not losing sight of the overarching objectives of energy and climate policy, it is necessary to strike the right balance between energy efficiency and social policy measures. A particular challenge is that energy efficiency policy and social policy have different time horizons and ranges: While social policies primarily target alleviation of financial distress in the short term, energy efficiency policies also have positive ecological, economic and social effects in the medium and long term – the so called multiple benefits of energy efficiency. In addition, it is essential that all end-users, low-income households included, achieve adequate levels of energy efficiency if the ambitious energy and climate targets in Europe are to be met.

To specifically address these challenges, the European Parliament commissioned SQ Consult, the Fraunhofer Institute for Systems and Innovation Research and the Universitat Politècnica de Catalunya to examine the relevance of energy efficiency for low-income households and to develop proposals for how to design policies targeting specific groups.
 
 
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  Improved health and greater social inclusion  
 

The study “Energy Efficiency for Low-Income Households” cites the most important positive effects that improving energy efficiency has on low-income households - apart from the obvious reduction of energy consumption and the associated energy costs: For example, adequate heating in all rooms improves well-being and health as well as helping to maintain the property value of the building. In addition, due to their lower energy costs, households have a bigger budget to spend elsewhere and therefore the possibility of greater social inclusion.

These positive effects can only be achieved if the specific barriers in low-income households are dismantled. These include the lack of capital for investments in energy efficiency, missing or insufficient information and the landlord-tenant dilemma.

Policy measures supporting energy efficiency in households can remove investment barriers, but the typical barriers affecting low-income households can only be eliminated if this target group is explicitly addressed by policies.

 
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  Finding the balance between energy efficiency and social policies  
 

The EU policy framework considers the need for energy efficiency policies combined with social policies to fight energy poverty. But it does not prescribe how these measures should be integrated into specific EU and Member State regulations. Finding the right balance between energy efficiency and social policies is the challenge to combating energy poverty effectively.

So far, only a few EU member states have implemented targeted measures to promote efficiency in low-income households. A major recommendation of the study is to design energy efficiency measures that take into consideration specific barriers affecting low-income households and the additional social or economic effects of energy efficiency for the target group of low-income households.

 
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  Recommended policy options  
 

Six overall recommendations, each with specific suggestions for different EU Directives are proposed in this study. These recommendations touch upon:
 

  1. Common definitions for vulnerable consumers and energy poverty to help standardise policy and increase political visibility, but leaving the Member States the freedom to further adapt these definitions to take into consideration country or regional differences.
     
  2. EU energy and climate targets in legislation to address equally all groups of end-users, including vulnerable groups. Active monitoring and reporting requirements could specify barriers that hamper policies reaching low-income households.
     
  3. Multiple benefits of energy efficiency to be proactively communicated to educate society on other other positive effects such as better health and well-being.
     
  4. Specific barriers affecting low-income households, in particular the split-incentives barrier (landlord/tenant dilemma), lack of access to capital and the lack of adequate and sufficient information to be addressed in EU legislation and considered by Member States in their strategy plans for building renovations.
     
  5. Balance between policies addressing energy efficiency and social measures (such as income assistance, reduced tariffs, tolerance for non-payment) to eradicate or reduce energy poverty are best left to Member States due to the large differences among them.
     
  6. Financing through European social funds or investment funds or infrastructure funds from other sectors benefiting from the impacts of energy efficiency, as for example health and social welfare funds, to be considered as a potential alternative or additional source of funding.

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  Contact the authors: SQ Consult
 

For more information, please contact the authors,

Sergio Ugarte
Monique Voogt
Bart van der Ree

P.O. Box 8239
3503 RE Utrecht
The Netherlands
info@sqconsult.com