Energy poverty in Europe

Where do we stand?

At present, around 50 million households in the European Union experience inadequate levels of services such as warmth, cooling and lighting or lack the means to power their appliances. This number can be translated, if considering the average 2.3 members per household in the EU, into more than 100 million people (out of 446 million) who suffer from inadequate energy services. And on top of this, household expenditures on energy (excluding transport fuels) are still rising, with the poorest families spending 10.4% of their total income for energy costs.

Low living temperatures and the stress of not being able to afford bills further exposed these people to respiratory and cardiac illnesses, as well as mental health problems. Ultimately, the limited access to affordable, reliable, sustainable and modern energy affects humans’ capabilities of fulfilling their potential and achieving social inclusion. For such reasons, awareness on energy poverty has been growing in Europe.

Yet, the concept of energy poverty is complex and varies significantly across time and space. The term was first introduced by Isherwood and Hancock in 1979, at that time when energy prices had significantly increased due to the oil crisis of 1973–1974. Still, energy poverty was not defined until 1991 when Brenda Boardman described it as the condition of those households that cannot afford to “have adequate energy services for 10 percent of income”. Since then, several definitions have been provided, but no agreement has been reached.

At the EU level, people are generally considered energy poor if they experience inadequate levels of essential energy services “due to a combination of high energy expenditure, low household incomes, inefficient buildings and appliances, and specific household energy needs”.

Measuring energy poverty is also hard. The EU Energy Poverty Observatory (EPOV), a project led by the EU Commission, has identified four indicators. The first two are based on self-reported experiences of limited access to energy services (ability to keep home adequately warm and arrears on utility bills), while the third and fourth indicators are direct measurements of energy expenditures. Beyond this, another common indicator is the European Energy Poverty Index (EEPI) that assesses the causes and symptoms of domestic energy poverty (regrouped in the EDEPI index) as well as the causes of transport energy poverty (the ETEPI index).

In Europe, only five states (Cyprus, France, Ireland, Slovakia and the United Kingdom) recognise energy poverty in their legislation and provide specific definitions. Few, such as Belgium or Spain, do not provide any definition but have developed official approaches to tackle the issue. In contrast, a high number of countries (among which Croatia, Czech Republic, Denmark, Estonia, Finland, Germany, Hungary and the Netherlands) still lack both an official definition and approach on energy poverty as they often consider a comprehensive social support system as enough or make limited efforts on the subject.

According to the EEPI 2019 Report, countries which perform best in alleviating domestic and transport energy poverty are Sweden (with the highest score), Luxembourg, Denmark, the Netherlands, France, the United Kingdom, Belgium, Germany and Spain. Worst-performing countries are Hungary, Bulgaria, Malta, Finland, Slovenia, Estonia, Italy and Latvia.

Interesting results emerge when separating the EDEPI index on domestic energy poverty and the ETEPI index on transport energy poverty: in domestic energy poverty, a clear divide exists between Western/Northern and Eastern/Southern countries. This is explained by stricter building regulations and much higher financial support to the poorest. On the other hand, several Eastern/Southern countries display compelling levels on transport energy poverty for the lower reliance on private cars for daily trip

During the COVID-19 crisis the access to affordable, reliable, sustainable and modern energy has promptly become a great concern due to people’s increased amount of time spent at home during lockdowns, the rise of smart-working or e-learning practices as well as the financial difficulties that many have experienced.

To contrast the emergency situation, governments around Europe have implemented several policies. In many countries, residential electricity and gas supply disconnections for non-payment were prohibited. Italy and Spain, among the first and most affected countries in Europe, postponed the deadlines for renewal of vulnerable consumers’ social tariffs on energy services. And Spain even extended the provision of social tariffs to those self-employed who had to stop their activities or significantly reduce the hours of work.

EU institutions have also considered actions above the national level. In April 2020, the “Renovation Wave” package was launched as part of the Green Deal Strategy to promote energy-efficient buildings and critical infrastructures. The initiative aims at supporting the fight against energy poverty by improving housing conditions, but also through the creation of jobs in construction, renovation and other labour-intensive industries. Together with this, the EU is following already-existing strategies to tackle energy poverty. An example is the “Clean energy for all Europeans package” that stresses the focus on consumers and contains specific non-legislative measures to define and better monitor energy poverty.

Ultimately, the COVID-19 crisis has once again demonstrated that energy provides critical services and can ultimately enhance people’s living conditions and capabilities. To this regard, energy poverty is multi-dimension phenomenon that interacts with all forms of inequalities (of income, gender, race and health). Now that the Commission has launched its plan for a green and just transition, there is a critical need to extend and improve the conceptualisation of energy poverty in Europe based on these considerations, propose a better common legislation and ultimately address the issue with multidimensional policies.