Unaffordable

High prices, hard decisions

Difficult choices – like “whether to heat or eat” – have become a daily reality for millions of people in industrialized economies.

Fuel poverty, often measured as a household needing to spend more than 10% of income on energy, is a relatively new phenomenon typically caused by a combination of low household income, poor heating and insulation standards, and rapidly rising energy prices.

The impacts of fuel poverty are most prevalent in two groups. Social isolation and excess winter death from respiratory and cardiovascular conditions are evident in citizens over 50 years. Infants, children and adolescents are sick more often and miss more school days, eventually falling behind their classmates. Absenteeism is also common in adults of working age, affecting both personal income and industrial productivity.

100 million people live in a state of fuel poverty, unable to afford adequate levels of energy services, particularly heating and cooling.

Counting the full costs

Fuel poverty also has significant societal and economic costs, including degradation of buildings from mold and humidity, or from the use of dangerous supplementary equipment such as fires and generators. In some areas, it also leads to deforestation as people turn to firewood for household heating, often using inefficient stoves or fireplaces.

Many governments try to ease the burden by offering fuel subsidies or energy efficiency retrofit measures to low-income households, typically at high cost to energy ministries. Yet the fall-out of fuel poverty results in additional need for health services or social assistance; more work is needed to better integrate policies across different ministries to minimize fuel poverty while optimizing both expense and savings.

Ultimately, energy companies carry the financial burden associated with customers who simply cannot pay their bills. Typically, this cost is spread among the entire customer base.

 

Personal impacts

• In low-income families, having to choose between “heating and eating”, inability to pay for prescription medications or health services, or for transportation to remain employed.

• In elderly populations, excess winter deaths – ranging from 11% (Paris) to 30% (Glasgow) – associated with respiratory and cardiovascular conditions, and from dementia and Alzheimer’s.

For infants, children and young people, increased the risk of low weight gain, illness, absenteeism from school and mental health effects.

Underlying dysfunctions

Inability to identify the fuel poor, and thus optimize delivery of assistance and services, rather than offering overly broad and costly subsidies.

Ineffective building codes, past or present, that result in high energy demand for space heating, particularly old houses.

Liberalization of energy markets, which in some cases has weakened government ability to influence both energy pricing and the profit margins of energy suppliers.

Taking action

Establishing clear and context-relevant definitions of fuel poverty is vital to identifying those in need and developing targeted solutions that efficiently combine technology, policy and economic perspectives. Indeed, cross-cutting action is needed in areas including:

• large-scale effort to upgrade the housing stock; poor quality construction and insulation, particularly in old homes, is a root cause of fuel poverty, regardless of the income level of the owner or tenant.

• promoting energy efficiency; educating the fuel poor about how to select and use high-efficiency equipment and appliances is vital; the initial savings of lower-cost devices, for example, can be lost to excess energy consumption and higher energy bills.

improving the delivery and up-take of available benefits; blanket subsidies or retrofit programs sometimes result in. In some instances, those eligible for assistance decline to participate – even when programs are free.

Increased transparency across the energy market is also vital, including both pricing of supply and data on consumption. Consumers need to have more information to make wise choices about suppliers and their personal energy use.

EnGage now

EnAct seeks additional input from individuals and organizations working in the area of unaffordable energy supply. Please help us – and others – better understand the scope and scale of this particular challenge by adding statistics, examples of personal impacts or underlying dysfunctions, or information related to solutions.

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