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OVERVIEW | Energy poverty in Europe: Policies and recent initiatives

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OVERVIEW | Energy poverty in Europe: Policies and recent initiatives

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by Vasileios Ntouros (NKUA)


Energy poverty is an increasing socio-economic problem with severe health impacts and significant environmental implications. It is related to poor building quality and the occupants’ socio-economic status, and affects millions of households across Europe. Despite the fact that various definitions are given in the literature to describe energy poverty, there is no single agreed EU-wide definition. Nevertheless they all tend to refer to a level of energy consumption that is unaffordable. The different views that exist across the European Member States on this issue, together with the various metrics that are used to measure energy poverty and to define vulnerable groups in their legislation, are additional drawbacks to treating the problem correctly. However, the consequences for human health and the economy are indisputable throughout Europe. The upgrading of Europe's building stock is key to alleviating energy poverty. There are plenty of examples of good practice, such as those outlined by the European Commission in its legislative proposals on clean energy at the end of 2016. BUILD UP has also published recommendations on policies that could be pursued by European governments.


Although the terms "energy poverty" and "fuel poverty" are closely associated with each other they are easily confused.  The term "fuel poverty" focuses on affordability of adequate energy services, whereas "energy poverty" is a broader term that extends to a household’s inability to pay energy bills and to achieve basic levels of energy services, with a result that it suffers inadequate energy access. According to the European Commission's (EC) 2010 Staff Working Document 'An Energy Policy for Consumers', energy poor households could possibly be defined as those “households that spend more than a pre-defined threshold share of their overall consumption expenditure on energy products”. Clearly, this can be correlated with low household income, fuel prices regulation and poor building energy efficiency. As is stated in BPIE’s factsheet, national renovation strategies should include dedicated policies and measures for low income households in order to tackle this situation.


Figure 1: Possible solutions and their constraints (Source: BPIE factsheet)


In Europe, the phenomenon of energy poverty gained the public's attention after the unprecedented financial crisis that began in 2008. The European Union responded with legislation that was published during the initial years of the crisis (the Internal Market in Electricity Directive, the Internal Market in Natural Gas Directive, the recast Energy Performance of Buildings Directive and the Energy Efficiency Directive). This legislation, taken together, encourages Member States to shape national plans to boost renovations and energy efficiency retrofits of buildings, as an indirect measure to alleviate energy poverty. However, the European Commission has recently sought to strengthen the legislation with the proposal for a revised Energy Performance of Buildings Directive and the proposal for a revised Energy Efficiency Directive within its Clean Energy Package, which recognize the multiple benefits from energy efficiency including the reduction of energy poverty. In parallel, the European Commission carried out a feasibility study on the role that EU funds can have in financing schemes that provide low-cost energy efficiency measures to help low-income households. Moreover, in response to the aforementioned proposals, FEDARANE recommended that a specific and quantifiable requirement to address energy poverty should be included, relative to the proportion of customers considered to be at risk. Within this context, a report for the European Commission provided further insight into energy poverty by refining EU wide data collection and monitoring. Furthermore, the EU Building Stock Observatory monitors the energy performance of buildings across the Member States, mapping energy poor areas and highlighting levels of energy poverty. In addition, a European Energy Poverty Observatory (EPOV) is under development, which will provide information on the socio-economic extent of energy poverty in Europe, and measures to combat it.


Figure 2: National shares of poor living conditions according to Eurostat, 2014 (Source: Energy Poverty Handbook)


In recent years, numerous initiatives have been undertaken in Europe to promote measures and good practices to reduce energy poverty; 54 million Europeans cannot afford to heat their homes in winter and about the same number are either facing energy debts or living in deteriorated dwellings. The EU-funded project ACHIEVE  aimed to contribute to practical and structural solutions for alleviating energy poverty in Europe. At the same time, the EC-LINC project provided tailored information and consultation approaches to assist low-income households in saving energy. ELIH-MED, focused on identifying and testing the feasibility of cost efficient technical solutions and innovative financial mechanisms, which could then be extrapolated to other Mediterranean territories. REEPWB, REELIH and REACH  projects focused on energy poverty in South East Europe where it is estimated that in the whole region, at least 50% of the population spends more than 10% of their net income on energy. More recently, the Horizon 2020-funded project Transition Zero got underway as an effort to renovate homes in France and the UK using the successful Dutch model "Energiesprong".  Another Horizon 2020 project, SAVES2, aims to reduce over 219,000 university students’ exposure to fuel poverty. Last but not least, the Social Innovation to Tackle Fuel Poverty programme is an initiative which aimed to identify and engage 15-20 innovative organisations that offer creative and systems-changing solutions, to tackle fuel poverty in five European countries: Germany, Greece, Italy, Portugal and Spain.


In summary, it can be stated that a household suffers energy poverty when it lacks access to basic levels of energy services. Experience shows that energy retrofit measures for energy poor homes are preferable to direct financial support, since these measures can simultaneously reduce energy costs and improve living conditions in dwellings. In this framework, the European Union has developed policies and support initiatives to upgrade the European building stock and help vulnerable groups. It is imperative to relieve the health problems associated with energy poverty; unquestionably the contribution of energy renovations in buildings is beneficial. There remains a great deal of effort to be made, but Europe is now well placed to tackle energy poverty.