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Energy poverty in Europe and its relationship to the Energy Union strategy

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Invited talk by Dr Harriet Thomson to the European Economic and Social Committee

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Energy poverty in Europe and its relationship to the Energy Union strategy

  1. 1. Energy poverty in Europe and its relationship to the Energy Union strategy Dr Harriet Thomson Professor Stefan Bouzarovski Dr Saska Petrova Dr Neil Simcock University of Manchester
  2. 2. What is energy poverty? When a household is unable to secure materially- and socially-necessitated levels of domes6c energy services (Bouzarovski and Petrova, 2015) Core drivers include: •  Energy needs and prac@ces •  Affordability and ability to access cheaper fuels •  Efficiency of built fabric and equipment •  Household income •  Policy marginalisa@on
  3. 3. EVALUATE project •  Energy Vulnerability and Urban Transi@ons in Europe (EVALUATE) www.urban-energy.org •  Five-year European Research Council funded project •  Aims to establish the driving forces of urban energy poverty in the post-socialist states of Eastern and Central Europe •  Mul@-scalar: ins@tu@ons, households, and buildings •  Mul@-methods: interviews, energy diaries, local surveys, sta@s@cal modelling and more
  4. 4. EVALUATE: An urban and neighbourhood level approach •  Focusing on dynamics within two inner-city neighbourhoods, while: •  Exploring na@onal and city- level processes •  Local support (Gdansk University, Charles University, CEU, CUW, Ss. Cyril and Methodius University)
  5. 5. A po?ed history… •  1979 - Bri@sh civil servants iden@fied the issue •  1991 - Brenda Boardman published her seminal book •  2001 - Concerns first raised at the EU-level in an ECSC opinion document •  2003 - Explicit recogni@on given to household customers in revised gas/electricity market direc@ves •  2009 - Energy poverty given legal recogni@on in 3rd energy package •  2016 – ongoing Energy Union reviews, opportunity to further incorporate energy poverty measures
  6. 6. UK (2001-2013): “A household is said to be in fuel poverty if it needs to spend more than 10% of its income on fuel to maintain an adequate level of warmth” England (new LIHC 2013-): A household is said to be in fuel poverty if it 1. has required fuel costs that are above average (the na@onal median level) 2. were they to spend that amount, they would be lec with a residual income below the official poverty line (60% median income) Ireland (2016-): “…a household that spends more than 10% of their income on energy is considered to be in energy poverty.” (Department of Communica@ons, Energy & Natural Resources, 2016: 8). France (2009-): A person is considered fuel poor "if he/she encounters par@cular difficul@es in his/her accommoda@on in terms of energy supply related to the sa@sfac@on of elementary needs, this being due to the inadequacy of financial resources or housing condi@ons” Slovakia (2015-): “Energy poverty under the law No. 250/2012 Coll. Of Laws is a status when average monthly expenditures of household on consump@on of electricity, gas, hea@ng and hot water produc@on represent a substan@al share of average monthly income of the household” (Strakova, 2014: 3).
  7. 7. Pan-European data context •  No dedicated survey of energy poverty •  Main data source is the EU Sta@s@cs on Income and Living Condi@ons: 1)  Ability to afford to keep the home warm 2)  Leaking roof, damp, and/or rot in home 3)  Arrears on u@lity bills in the last 12 months •  As well as Household Budget Surveys •  Provides actual expenditure data at na@onal level •  Not currently standardised across Europe
  8. 8. Core EU-SILC Index of Fuel Poverty (CIFP) •  Previous research has combined indicators at the country-level to produce single composite scores (Healy & Clinch, 2002; Thomson & Snell, 2013) •  The interrela@on of indicators at the household- level is under-explored •  CIFP is a summa@ve index that adds up the number of EU-SILC indicators reported, with a possible range of 0 – 3 •  First pan-EU household-level index of energy poverty severity
  9. 9. CorrelaUons between EU-SILC indicators •  Moderate associa@ons between the core variables •  The fact they are not highly correlated suggests that the variables are capturing different aspects of energy poverty U@lity arrears Leak/damp/rot Cannot afford warm home U@lity arrears 1.00 .35 .47 Leak/damp/rot .35 1.00 .39 Cannot afford warm home .47 .39 1.00 Tetrachoric correla@on coefficient matrix of key EU-SILC indicators Data: EU-SILC 2007 Cross Sec@onal All correla@ons are sta@s@cally significant at the p < .001 level
  10. 10. Country Number of indicators reported (% of households) One Two Three Austria 15.6 2.6 0.3 Belgium 20.2 4.0 0.6 Bulgaria 42.8 25.3 6.4 Cyprus 30.4 15.2 3.0 Czech Republic 15.5 2.4 0.3 Denmark 10.5 1.2 0.1 Estonia 22.4 3.8 0.6 Finland 10.4 0.9 0.1 France 15.8 3.4 0.7 Germany 15.4 2.7 0.5 Greece 26.8 8.8 2.5 Hungary 23.2 10.5 3.3 Ireland 19.4 4.8 0.8 Italy 23.2 6.3 1.6 Latvia 31.7 13.5 3.0 Lithuania 31.3 9.8 1.9 Luxembourg 16.4 0.8 0.0 Malta 22.1 4.8 0.3 Netherlands 16.3 1.6 0.2 Poland 22.2 7.6 2.3 Portugal 32.6 11.2 1.2 Romania 29.1 11.6 4.6 Slovakia 15.1 2.1 0.5 Slovenia 32.1 9.9 1.4 Spain 24.0 4.2 0.5 Sweden 11.1 1.2 0.1 United Kingdom 16.5 3.6 0.5
  11. 11. Country rankings - 2010 2010 Equal 2010 Severity Finland 1 1 Denmark 2 2 Sweden 3 3 Luxembourg 4 4 Slovakia 5 6 Netherlands 6 5 Czechia 7 7 Austria 8 8 Germany 9 9 France 10 10 UK 11 11 Belgium 12 12 Ireland 13 13 Estonia 14 14 Malta 15 15 Spain 16 16 Italy 17 17 Poland 18 18 Hungary 19 20 Greece 20 19 Lithuania 21 22 Slovenia 22 21 Portugal 23 23 Romania 24 24 Latvia 25 25 Cyprus 26 26 Bulgaria 27 27 Key: a = % of households repor@ng 1 indicator b = % of households repor@ng 2 indicators c = % of households repor@ng 3 indicators Scenario 1 - Equal weighUng: 0.3333 a + 0.3333 b + 0.3333 c Scenario 2 - Severity weighUng: 0.1667 a + 0.3333 b + 0.5000 c •  The CIFP has been compared with official UK measures of energy poverty, and shows good face validity, par@cularly with the 10% defini@on •  Posi@ve associa@on between income poverty and CIFP, with a strong income disparity: Number of CIFP indicators Median disposable household income (EU27) 0 €24,245.00 1 €17,000.00 2 €10,800.00 3 €8,073.00
  12. 12. Regions at risk •  52 million + households in EU27 (Thomson, 2015) •  Reflects exis@ng regional structural inequali@es (Bouzarovski and Tirado Herrero, 2015) •  Southern, Central and Eastern Europe most at risk of energy poverty 2010 Equal 2010 Severity Finland 1 1 Denmark 2 2 Sweden 3 3 Luxembourg 4 4 Slovakia 5 6 Netherlands 6 5 Czechia 7 7 Austria 8 8 Germany 9 9 France 10 10 UK 11 11 Belgium 12 12 Ireland 13 13 Estonia 14 14 Malta 15 15 Spain 16 16 Italy 17 17 Poland 18 18 Hungary 19 20 Greece 20 19 Lithuania 21 22 Slovenia 22 21 Portugal 23 23 Romania 24 24 Latvia 25 25 Cyprus 26 26 Bulgaria 27 27
  13. 13. Regions at risk •  52 million + households in EU27 (Thomson, 2015) •  Reflects exis@ng regional structural inequali@es (Bouzarovski and Tirado Herrero, 2015) •  Southern, Central and Eastern Europe most at risk of energy poverty 2010 Equal 2010 Severity Finland 1 1 Denmark 2 2 Sweden 3 3 Luxembourg 4 4 Slovakia 5 6 Netherlands 6 5 Czechia 7 7 Austria 8 8 Germany 9 9 France 10 10 UK 11 11 Belgium 12 12 Ireland 13 13 Estonia 14 14 Malta 15 15 Spain 16 16 Italy 17 17 Poland 18 18 Hungary 19 20 Greece 20 19 Lithuania 21 22 Slovenia 22 21 Portugal 23 23 Romania 24 24 Latvia 25 25 Cyprus 26 26 Bulgaria 27 27 Southern Europe: •  Whilst more temperate, indoor hea@ng is required at various points throughout the year •  Poor energy efficiency standards •  Challenging macroeconomic circumstances and prolonged fiscal austerity = –  Real loss of household income –  Cuts in financing for energy-related infrastructure •  High levels of dependence on imported energy in island states of Cyprus and Malta •  Growing electrifica@on for indoor cooling and appliances
  14. 14. Regions at risk •  52 million + households in EU27 (Thomson, 2015) •  Reflects exis@ng regional structural inequali@es (Bouzarovski and Tirado Herrero, 2015) •  Southern, Central and Eastern Europe most at risk of energy poverty 2010 Equal 2010 Severity Finland 1 1 Denmark 2 2 Sweden 3 3 Luxembourg 4 4 Slovakia 5 6 Netherlands 6 5 Czechia 7 7 Austria 8 8 Germany 9 9 France 10 10 UK 11 11 Belgium 12 12 Ireland 13 13 Estonia 14 14 Malta 15 15 Spain 16 16 Italy 17 17 Poland 18 18 Hungary 19 20 Greece 20 19 Lithuania 21 22 Slovenia 22 21 Portugal 23 23 Romania 24 24 Latvia 25 25 Cyprus 26 26 Bulgaria 27 27 Southern Europe: •  Whilst more temperate, indoor hea@ng is required at various points throughout the year •  Poor energy efficiency standards •  Challenging macroeconomic circumstances and prolonged fiscal austerity = –  Real loss of household income –  Cuts in financing for energy-related infrastructure •  High levels of dependence on imported energy in island states of Cyprus and Malta •  Growing electrifica@on for indoor cooling and appliances Central and Eastern Europe: •  Demise of communism brought about rapid and substan@al restructuring to move towards a market-based economy •  Measures included fiscal austerity, widespread priva@sa@on, and deregula@on of the economy •  Income inequali@es and decreased purchasing power •  Very poor housing stock quality •  Liberalisa@on of energy markets resulted in removal of subsidies but without corresponding safety nets –  Caused significant increases in the cost of hea@ng and other energy services –  Issues of non-payment of u@lity bills
  15. 15. Energy poverty in post-socialist CEE Czech Republic vs Hungary vs Poland 0% 5% 10% 15% 20% 25% 30% 35% 2005 2006 2007 2008 2009 2010 2011 2012 % households PL HU CZ Percentage of households spending more than 20% of their income on domes@c energy (equivalised units), 2005-2012 Bouzarovski and Tirado Herrero (2016)
  16. 16. A domesUc energy affordability gap Household incomes vs energy expenditures in Hungary Domes@c energy price index, infla@on rate and rate of increase in earnings; Hungary, 1992-2013 Purchasing power gains Domes@c energy affordability gap Bouzarovski et al. (2015)
  17. 17. Natural gas – a ‘price hike’ The growing per unit cost of an imported fuel Price indices of main domes@c energy carriers, infla@on rate and rate of increase in wages and pensions; Hungary, 2000-2013 Bouzarovski et al. (2015)
  18. 18. Further EVALUATE findings •  Energy poverty is complex and dynamic, varying spa@ally and temporally •  Summer@me cooling is a significant issue •  Some households are switching to tradi@onal fuels, such as firewood, as a coping mechanism •  Typologies that challenge no@ons of vulnerability: •  Short-term residents - ocen renters and in early adulthood •  Working age families - ocen in full employment and with school-aged children •  Highly educated households in poor quality and/or expensive housing
  19. 19. Moving forward - policy •  Need to recognise specific energy needs and all energy services (especially cooling) •  Focus on other energy carriers, e.g. hea@ng oil •  Monitor MS vulnerable customer defini@ons •  Adopt a broad EU defini@on of energy poverty •  Include energy poverty in impact assessments •  Review & address gaps in 3rd energy package •  Holis@c approach, with focus on long-term allevia@on via infrastructural investments
  20. 20. Moving forward - data •  Radically improve EU indicators to enhance our understanding of energy poverty •  See Thomson and Snell (2014) for recommenda@ons •  Could include repor@ng requirements for MS and support improved data mechanisms •  Increase technical and scien@fic capacity •  Promote data sharing and progression beyond state-of-the-art: •  Data4Ac@on – good example of data sharing •  EUFPN htp://fuelpoverty.eu/findresource/ (350+ ar@cles)
  21. 21. Thank you www.urban-energy.org | www.fuelpoverty.eu @harrimus @stefanbuzar @curemanchester
  22. 22. Further reading •  Bouzarovski, S., and Petrova, S. (2015). A global perspec@ve on domes@c energy depriva@on: Overcoming the energy poverty–fuel poverty binary. Energy Research & Social Science, 10: 31-40. htp://www.sciencedirect.com/science/ar@cle/pii/S221462961500078X •  Bouzarovski, S., and Tirado Herrero, S. (2015). The energy divide: Integra@ng energy transi@ons, regional inequali@es and poverty trends in the European Union. European Urban and Regional Studies, DOI:10.1177/0969776415596449 •  Bouzarovski, S., Tirado Herrero, S., Petrova, S., and Ürge-Vorsatz, D. (2015). Unpacking the spaces and poli@cs of energy poverty: path-dependencies, depriva@on and fuel switching in post- communist Hungary. Local Environment, DOI:10.1080/13549839.2015.1075480. •  Thomson, H., Snell, C., and Liddell, C. (2016). Fuel poverty in the European Union: a concept in need of defini@on? People, Place and Policy. Available at: htp://extra.shu.ac.uk/ppp-online/fuel-poverty-in-the-european-union-a-concept-in-need-of- defini@on/ •  Thomson, H. (2015). Exploring the incidence and intensity of fuel poverty in the EU. Available at: •  htp://urban-energy.org/2015/07/02/workshop-report-fuel-poverty-and-energy-vulnerability-in- europe/. •  Thomson, H., and Snell, C. (2014). Fuel Poverty Measurement in Europe: a Pilot Study. University of York. Available at: htp://fuelpoverty.eu/wp-content/uploads/2014/06/Fuel-Poverty-Measurement-in-Europe-Final- report-v2.pdf

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