Guidance for Policymakers
This page gives a short overview of essential points to consider for policymakers when drafting policies to address energy poverty, regarding Measurement, Definition, Policy type and Financing & Funding.
The measurement of energy poverty is important to assess the current situation in terms of energy poverty. Energy poverty is notoriously difficult to quantify and measure, as it is a multi-dimensional phenomenon. Different indicators are possible:
- Energy costs and income: quantify energy poverty by looking at the energy expenditure of households in relation to an income measure (e.g. number of households spending more than a certain share of their income on domestic energy services)
- Self-assessment: assess energy poverty by asking households directly to what extent they feel able to afford energy (e.g. ability to keep home adequately warm in wintertime and cool in summertime)
- Direct measurement: measure physical variables to determine adequacy of energy services (e.g. room temperature)
- Proxy indicators: give an impression of the energy poverty situation through related factors, such as arrears on utility bills, number of disconnections and housing quality.
See the report for the European Commission on Selecting Indicators to Measure Energy Poverty for more information on the measurement of energy poverty. The Indicators & Data section shows some of these indicators for countries across the European Union. Read more about the measurement of energy poverty in publications related to the theme Measurement in the Publications section.
The definition of energy poor and/or vulnerable households is essential to target policies to those households that need assistance. This definition should be tailored to the specific situation in terms of climate, housing quality, economy and the structure of energy costs. The definition can differ for particular types of policies: for example, disconnection protection during wintertime is often associated with the targeting of physically more vulnerable households, such as disabled and pensioners, as their health is most at risk in case of disconnection.
In general, targeting can be based on multiple parameters, which are related to some important causes behind energy poverty:
- Socio-economic group: some socio-economic groups are known to be particularly vulnerable to energy poverty. For example, chronically ill and disabled people tend to have higher energy needs as they are more often at home, while they are also more likely to have a lower income. The Policies & Measures section allows to select example policies that target specific socio-economic groups.
- Housing situation: certain housing situations are known to present certain risks in terms of energy poverty. For example, households that live in privately rented buildings can face the so-called landlord-tenant dilemma, whereby the landlord might be less willing to pay for energy efficiency improvements when he does not benefit from these improvements. The Policies & Measures section allows to select example policies that target specific housing situations.
- Energy carrier: use of certain energy carriers is known to be related to energy poverty. For example, in certain countries the use of expensive and inefficient heating oil boilers would make households more vulnerable to be energy poor. The Policies & Measures section allows to select example policies that target specific energy carriers.
- Location: certain areas are known to have more households in energy poverty. This can be used for policies that employ Area-based targeting, whereby policies are for example targeted to low-income districts, households in rural areas or household in colder mountainous areas.
See the report for the European Commission on Energy poverty and vulnerable consumers in the energy sector across the EU: analysis of policies and measures for more information on the definition of energy poverty and vulnerable consumers. Read more about the definition of energy poor and/or vulnerable households in publications related to the themes Definitions and Causes in the Publications section.
Policies & Measures to address energy poverty need to be adapted to the specific situation in terms of climate, housing quality, economy and the structure of energy costs. The Policies & Measures section allows to select example policies for specific types of policies and measures, and you can find publications related to the theme Policies & Measures in the Publications section. In general, the following policies and measures are possible:
- Financing improvements in the energy situation of households is the most preferred option to solve energy poverty structurally through directly facilitating the improvement of Building insulation, Cooling systems, Energy Storage, Heating system, Household appliances, Renewable energy and/or Transport.
- Energy audits are visits to vulnerable households to provide direct advice on how to improve their specific situation. These measures tend to be quite successful in reaching households, because they are often carried out in cooperation with other social organisations, for example social workers or health professionals.
- Financial assistance to reduce energy bills can be given in two ways. Social tariffs lower the energy bill that has to be paid by households, while energy bill support provides financial assistance to pay the energy bill. These measures are effective in lowering the burden of energy bills of households in the short-term, but do not provide long-term solutions to the problem.
- Disconnection protection provides protection against disconnection for households, often in colder months during wintertime. Most common is to disallow disconnection completely during wintertime for certain physically more vulnerable households, such as disabled and pensioners.
- Information and awareness are measures that indirectly facilitate households to improve their situation by providing advice, information or education.
- Social support provides general income support for households to cover more general expenses such as housing or living costs, which can also include energy costs.
Financing and funding of energy poverty policies and measures can happen through different methods:
- Financing specific improvements, such as building insulation, can be done through Tax incentives, Grants and Loans. In general, grants are the preferred option for financing improvements, as this is the easiest accessible for energy poor households. Loans are the least preferred, because most energy poor households would be reluctant to take on additional debt.
- The funding of measures can be done through Public funding (from a Global, European, National, Regional or Local source), Private funding, Public-private partnerships or levies (Electricity levy, Natural gas levy or Heating oil levy). The funding of measures needs to be especially cautious of the distributional effects of funding. For example, electricity levies that are used to fund solar panels can have regressive impacts: energy poor households spend a relatively larger share of their income to pay these levies, while they might not be able to actually access this funding.
If you have questions on measuring, defining and addressing energy poverty through policies, the possibility exists to ask technical assistance through the EU Energy Poverty Observatory. Please direct your questions to firstname.lastname@example.org.