ALLEVIATING FUEL POVERTY IN THE EU

Fuel poverty is a major problem for Europe, as between 50 and 125 million people are unable to afford a proper indoor thermal comfort. Despite the fact that there is no common European definition, the importance of the problem as well as the severe health impacts caused by fuel poverty are widely recognised. Specifically, excess winter deaths, mental disability, respiratory and circulatory problems are adversely affected by fuel poverty.

Figure: Percentage of people at risk of poverty in 2012 (Source: Eurostat).

To evaluate the extent of the problem, the study describes the current situation of fuel poverty in Europe using data from Eurostat. The indicators used to measure fuel poverty are referring to the inability of people to keep their home adequately warm, to pay their utility bills and to live in a dwelling without defects (leakages, damp walls, etc.). In 2012, 10.8% of the total European population were unable to keep their home adequately warm, increasing to 24.4% when referring to low-income people.

Table: Percentage of people at risk of poverty affected by fuel poverty as reflected by three related indicators (Based on Eurostat data 2012). * Data from 2011.

The table, ranked by the average of the three fuel poverty indicators, presents the share of people at risk of poverty who are affected by fuel poverty. As shown, fuel poverty is an acute problem in most of Central, Eastern and Mediterranean EU countries, particularly in Bulgaria, Hungary, Greece and Cyprus, while it is less of an issue in northern European countries.

Fuel poverty can be correlated with low household income, high energy cost and energy inefficient homes and can be tackled by income increase, fuel prices regulation and energy efficiency improvements in buildings. Energy costs are growing faster than household income. Therefore, energy subsidies and direct financial support for household heating cannot provide a sustainable long-term solution to the fuel poverty problem. These measures require continuous public budget allocation without generating added value or economic growth. The continuous expenditure from public budgets only preserves the status quo. 

However, vigorous energy renovation measures of fuel poor homes can give a long-term sustainable answer to fuel poverty. These measures address the root of the problem and result in reduced energy costs and/or improved thermal comfort in homes. Moreover, the implementation of energy efficiency measures can create or maintain jobs, reduce illness, rehabilitate poor districts and therefore contribute to social inclusion. Results from implemented energy renovation programmes targeting the fuel poor in some EU countries demonstrate these positive effects.

Case studies of EU countries financing measures against fuel poverty indicate that - even though energy efficiency measures have proven to be the most sustainable solution to the fuel poverty problem - they receive lower funding compared to income and fuel price support schemes. The study analyses the Cohesion Policy funds for the periods 2007-2013 and 2014-2020 and shows that a significant share -higher than the previous period- of the Cohesion Policy budget 2014-2020 can be used for energy efficiency actions. Therefore, all three Cohesion Policy financial instruments may support the energy renovation of buildings and in particular measures targeting fuel poor and vulnerable consumers. 

In order to achieve the social, environmental and energy goals set by the EU for 2020, the report recommends the following actions:

• Higher allocation of EU Funds on renovation programmes targeting vulnerable and fuel poor people;
• Implementation of dedicated national programmes addressing the root causes of the fuel poverty problem;
• Shifting gradually the price control mechanisms and fuel subsidies to more active and effective public expenditure on renovation measures;
• Defining the societal groups that cannot afford sufficient energy to satisfy their basic needs;
• Improve statistical data collection to provide additional evidence on the scale and impact of fuel poverty in the EU, in order to have a reliable basis to develop effective policies and support programmes;
• Development of a longer-term fuel poverty eradication strategy for the European Union, which should be supported by a predictable and reliable policy framework including an EU-wide energy saving target for 2030. 

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