Energy Poverty in EU Policies?
In an increasing number of EU countries, it is recognised that a
part of the population has a hard time paying energy bills and faces
the risk of being disconnected from its energy supply. As an example,
there is new evidence that as many as 10% of Spaniards have this
problem. While for some people it is simply a problem attributable
to poverty, for others it is as much a question of high energy bills
because of inefficient houses, equipment, etc. With the current increases
of the energy prices, the number of people affected from the energy
poverty is growing in the EU.
With increasing recognition
of energy-poverty problems, a growing number of politicians and stakeholders
has promoted the concept of integrating
energy-poverty considerations into relevant EU policies. The recent electric-
and gas-market directives require the countries to limit disconnection
of vulnerable consumers, but the real solution must be to bring daily
energy costs within the realistic reach of consumers’ ability to
pay, for instance with energy efficiency that can reduce their energy
bills. Support is often better used to increase energy efficiency of
vulnerable consumers than to support them directly to pay energy bills,
but the energy efficiency has to be implemented before consumers are
about to be disconnected.
EU policies are regulating energy use in the EU countries with a number
of measures, including directives and support mechanisms. If these measures
are made and implemented with an eye on energy poverty, they can help
the EU countries to reduce the energy poverty problems and the related
INFORSE-Europe has already worked on proposals for integration of energy poverty
into use of EU legislation. (Read
INFORSE-Europe's views in 2009). On this page, INFORSE-Europe's
ideas are presented in their status by the end of 2010. Comments are welcome,
proposals further as policies and ideas develop.
Proposals for EU Internal Energy Markets
In 2009, the directives for the internal electricity and gas market directives
(2009/72/EC and 2009/73/EC), and they now include the following sentences:
States shall define a concept of vulnerable customers which may refer
and, inter alia, to the prohibition of disconnection of such customers
in critical times".
The requirement to refrain from disconnection is one way of addressing
the energy poverty problem, but it is a very short-term solution. Such
requirements (though not mandated by the EU) has in the past lead to
problems with long-term non-payment in Central Europe, in turn deteriorating
the economy of the power supplier, and lack of action of the nonpayers.
The requirement not to disconnect vulnerable costumers must be combined
- programs to increase
- social support,
for the most vulnerable, so they can pay bills
- other measures,
maybe a "lifeline-tariffs" by which a basic
level of consumption is charged a
- The energy price increases can be limited, aiming at heat prices
below gas prices. This can be done by changing heat supply from
to CHP or local biomass combustion.
recommends that in the implementation of the revised electricity and
gas market directives that were adopted in
2009, the EU countries include the following:
- Make support available for increased energy efficiency in households
that are in risk of
being unable to pay their energy bills. This could be households that
have energy bills
(electricity, gas and heating expenses combined) above 10% of disposable
priority should be given to the most vulnerable households, which is
children, or those who are elderly, sick or disabled. The support should
households to reduce their energy bills to affordable levels. In case
part of the support is
given as loans, the combined repayment of loan, interest of loans, and
forecast for remaining
energy bills should be significantly lower than previous energy bills,
and preferably not
exceed 10% of disposable income.
- Assist households
in risk of being unable to pay energy bills with free advice that
available with energy advisers that can help the households to reduce
energy bills, with or
without public support.
- Provide social
support for vulnerable households should be scaled with changing
- Combine social
support for households in energy poverty (spending more than 10%
of income for electricity and heating bills) with
increased energy efficiency.
- As part of above
proposals provide "pay-as-you-save" (PAYS)
programmes with loans where payments for an energy efficiency
improvement are directly taken from the energy savings, i.e. at no
to the households.
Invite households that default from energy payments for electricity
and heating, to make a plan for reduction of energy costs and
energy bills to avoid disconnection.
- Invite heat suppliers
with extraordinarily high heating costs (can be defined as costs
above consumer tariffs for natural
by a national
indicator for heating costs) to plan for reduction of heat
supply tariffs, with use of structural funds and loan guarantees
plan can include increase of energy efficiency of heat network
and heating stations, changing of fuels, and introduction
of combined heat and power.
It can also include changing of heat network structure, to
avoid too long transmission lines, but interconnect nearby
efficiency in supply.
- Consider tariff regulation to reduce fixed payment elements
and remove payment structures where the first units of
at a higher (sometimes much higher) rate than subsequent
units. These tariff structures harm the poorer, smaller consumers.
introduce a "lifeline tariff", where a basic energy
consumption is charged less than the following, larger part
of the energy consumption.
The EU countries
have to implement the revised Directives until April 2011. The implentation
should include how to deal with the protection of vulnarable costumers.
Proposals for EU Funding - Structural Funds
EU funding, in particular structural funding have increased reliance
on fossil fuels with support, among others, for road building and expansion
og gas networks. Support to increase energy poverty with improvements
of buildings have been limited to first 3% and now 4% of the structural
funds. Structural funding in all Central European countries have followed
this pattern, but it is not just a question of EU policies, the current
low support for energy efficiency and renewable energy is just as much
a result of national priorities.
Future structural funding must have reduction of fossil fuel use and
reduction of energy poverty as major objecties. This must lead to that
a substantial part of the funding be used to reduce energy bills by improving
energy efficiency and changing supply to more local energy sources including
biomass, solar, and, where available, geothermal energy. Households in
energy poverty must be prioritised in these structural funds. The upper
limit of 4 % of structural funds for energy efficiency must be removed.
In the current round of structural funds, project to reduce energy poverty
with energy efficiency and renewable energy must be given priority in
allocation of the remaining funding.
In the coming financial period from 2014, a substantial part of the
structural funding must addres energy poverty with energy efficiency
and renewable energy so the poorer poeple increasingly get sheltered
from energy prices crisis that we can expect to become more common in
To maintain a focus on household energy use, and thereby on energy poverty,
the EU Commission should give guidelines for structural funds to the
national governments to support individual housing projects, for instance
via energy efficiency finding for housing with a priority on reducing
energy poverty with energy efficiency. There is a large potential here,
given the low energy efficiency level in many houses in Central Europe
as energy efficiency in buildings was not a priority of the past decades
due to state policies of providing cheap energy, well below market prices.
Energy poverty can be integrated in other policies and support schemes.
In the UK energy
poverty has been addressed over the last 10-15 years by the UK Government
that has delivered large scale insulation programmes
aimed at tackling fuel poverty (often called "affordable warmth").
Most programmes are usually funded nationally by mandatory funding by
the utility companies at approx £1-£2
billion per year with the costs of the programme
added to all consumers' energy bills. The latest programme is called
the Carbon Emissions Reduction Target (CERT) and provides free
loft and cavity wall insulation to everyone over 70 and to families
on low incomes. In addition all other householders can have discounted
provides a payback on the capital cost over approx 3 years. Also utility
companies distribute very low cost energy saving compact florescent lights
supermarkets and shops (approx £0.20 each, or 25 euro cents
companies then meet their reduction requirements to the "Carbon
Emissions Reduction Targets" in this way.
With the update of
the the EU energy efficiency action plans, now planned for 2011, requirements
for utilities to address energy poverty with energy
efficiency, could be integrated in the new plans.
Read Articles & Books on energy
poverty in the UK:
• The cold claims lives while energy
companies get rich. Successive governments have allowed Britain's privatised,
utility companies to get away with murder.
by George Monbiot, 27 December 2010.
Read it in
- Cold-Hearted. The level of excess winter deaths in the UK is higher
This is why. Same article with
references at Monbiot.
Fuel Poverty, Challenges and Solutions.
by Brenda Boardman, Emeritus Fellow at ECI, University of
January 2010. Published by Earthscan.
The book includes comprehensive survey
of figures and tables and evaluation
of the UK Warm Homes & Energy
Conservation Act 2000 and the subsequent absence of coherent policy
responses from governments who relied far too heavily initially on
falling fuel prices. The author provides a comprehensive and devastating
critique of Government's failure to tackle energy poverty
- and offers a constructive way forward,
based on a low-carbon and energy-efficient strategy.
Read reviews of the book at Earthscan,
and at Warmer
Houses Healthier Homes' web site.
on Energy Poverty in 2009.
- Results of the FinSH
project - Financial and Support Instruments for Fuel Poverty in Social
Housing. Intelligent Energy europe (IEE) Project in December
2007 - May 2010. Among the results are several reports, success and
case stories and a guide book
energy efficiency in the social housing stock called “Affordable
Warmth for all”.
(Among the partners of the project there were 2 INFORSE-Europe members:
GERES and Severn Wye Energy Agency (UK).
to energy efficiency policies
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