How can the European Commission tackle the growing challenge of energy poverty across EU Member States?

This piece is based on the recently published report by the INSIGHT_E consortium ‘Energy poverty and vulnerable consumers in the energy sector across the EU: analysis of policies and measures’. The full report can be found on the INSIGHT_E website, www.insightenergy.org

Energy poverty, often labelled as fuel poverty, is essentially a situation where a household or person is unable to afford the basic energy services required. As John Hills set out in his 2012 review,[1] this is an important and distinctive issue that matters due to the associated excess winter deaths and health impacts, its impact on low income households who often face higher costs and have limited ability to address the situation, and as a barrier to addressing energy saving potential in the building stock.

Based on the limited European wide data that is available, we know that this is a problem across many Member States. In particular, it is the Central Eastern European and Southern European states where the problem is most pervasive, due to growing economic problems in recent years, poor building stock efficiency, and often inadequate heating systems. In the Scandinavian region, the problem appears limited.

Despite the problem, few Member States (UK, Ireland, Italy, Slovakia) officially recognise the concept although a number of countries are actively engaged on this topic, both at levels of government and civic society. In part, this reflects the challenge of developing adequate definitions, which are both meaningful for policy making and can be supported by the statistics. The debate in the UK in recent years highlights this challenge. Other Member States choose not to recognise the concept for other reasons, including that it is not considered distinctive from general poverty concerns.

The low recognition of the problem across Member States means that there is a role for the European Commission to take a lead. Indeed, the Commission’s recognition of the issue has grown in recent years, including requirements for Member States to identify and protect vulnerable consumers in the directives relating to the regulated energy markets for electricity and gas. The Commission also set out a clear statement on the importance of tackling energy poverty in its recent Communication on the Energy Union Package.

As part of this INSIGHT_E report, we have made a number of recommendations concerning the enhanced role the Commission could play. Firstly, the Commission should set out explicitly what energy poverty is, although related how it differs from vulnerable consumer protection, and highlight the definitions being used and actions being taken across Member States. This means going beyond a focus on regulated markets, for example in rural areas where most households are on oil, and in urban areas where a large proportion of the housing stock is linked to district heating.

Secondly, the Commission should develop the indicator set to better identify the problem. We have not advocated the use of an expenditure-based metric as the current data could not support it but rather improving the survey-based metrics (from EU-SILC) currently in place. Thirdly, it could target resources towards those regions in most need, through research channels and other mechanisms, and consider how to promote targeted energy efficiency measures (via its competence in this area) on low income households.

Due to the significant differences across Member States, the Commission should keep the principle of subsidiarity in place, as Member States should undertake action specific to their circumstances. However, the Commission does have a role in highlighting the problem of energy poverty, sharing best practice, and looking for ways to fund research and actions to address the problem.

[1] Hills, J. (2012). Getting the measure of fuel poverty: Final Report of the Fuel Poverty Review. CASE report 72. ISSN 1465-3001. March 2012.

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