Depending on the indicator selected, between 8% and 16% of the EU population is facing energy poverty, while most of the energy poor are not income poor, according to a comprehensive analysis of the main energy poverty indicators.

Amidst the EU’s push for a fair green transition, and further reinforced by the uncertainties of the energy market, the issue of energy poverty has come to the forefront and become a critical policy priority. Energy poverty can be measured in different ways, but its measurement is a challenge for policy formulation and action to address it.

A JRC study investigated four primary energy poverty indicators to understand the EU-wide distribution and socio-economic profiles of “energy poor.” The findings underline the usefulness of relying on a battery of various indicators to provide a picture of energy poverty.

The Social Climate Fund regulation and the revised Energy Efficiency Directive define energy poverty as a household’s lack of access to essential energy services, such as heating, hot water, cooling, lighting and energy to power appliances.

According to the Commission’s Recommendation on Energy Poverty, it is a multidimensional phenomenon driven by three underlying causes, namely, high-energy expenditures in proportion to household budget, general low levels of income and low energy performance of buildings.

What’s the challenge when measuring energy poverty?

There are numerous papers discussing the advantages and disadvantages of different energy poverty indicators used in Europe, but little is known about their overlap and their interrelationships.

The JRC study addresses this gap, for the first time, by assessing the coverage, overlap, and socio-economic profiles of four primary energy poverty indicators employed in the EU for cross-country comparisons, using harmonized microdata for all 27 EU countries.

This study was developed within the Assessing and Monitoring Employment and Distributional Impacts (AMEDI) projects carried out with the Commission’s Directorate General for Employment, Social Affairs and Inclusion.

The study employs two types of indicators: “expenditure-based” indicators and “consensual approach” indicators. The expenditure-based indicators are calculated using monetary values: the 2M indicator is calculated as the proportion of households whose share of energy expenditure in income is more than twice the national median (2M indicator), i.e. energy costs represent a high share of expenditures.

While the M/2 indicator (low absolute energy expenditure) is calculated as the proportion of households whose energy expenditure is below the national median energy consumption.

The “consensual approach” indicators are instead based on self-reported assessments of housing conditions: the share of people keeping their house adequately warm (AW indicator), and those who have arrears on utility bills (UB).

The calculations are based on EU statistics and income living conditions (SILC) data from 2015 matched to Household Budget Survey (HBS) data from the same year and uses EUROMOD for refining estimates of household disposable income and improve comparability across countries. For example, they show that 8.5% of Europeans were unable to keep their house warm in 2015 (indicator AW).

The analysis finds that there is very little overlap between the four energy poverty indicators examined. This explains why at least 40% of the EU population (around 180 million citizens) would be classified as “energy poor” if one would follow a “union approach,” in which someone is energy poor by at least one indicator.

On the other side, an “intersection approach”—where poor is who satisfies the poverty condition simultaneously for the four indicators—would lead to a very low energy poverty rate of 0.3% of the EU population, i.e. about 330 thousand.

The results

The aggregate analysis carried out shows that between about 8% (using consensual indicators) and about 16% (using expenditure-based indicators) of the EU population can be classified as energy poor.

Education and employment have a significant impact on energy poverty, as a higher rate of adults with jobs or higher education levels can slightly decrease the risk of experiencing energy poverty. Remarkably, about 30% of energy-poor households are also income-poor, falling below the poverty threshold.

The study also reveals that middle-income households face a relatively high incidence of energy poverty, so it does not only affect income-poor individuals.

Energy poverty among EU Member States

Energy poverty also displays significant disparities across EU countries, as it is influenced by very heterogeneous national realities, including geography, natural resources, climate, infrastructure, national public policies, etc. Furthermore, cultural aspects can explain differences in self-reporting energy deprivation conditions.

For instance, in Greece and Bulgaria, nearly 30% of the population is energy poor by at least two indicators, while in Western and Northern EU countries, this figure drops below 5%. Moreover, the differences in energy poverty rates across EU countries is much larger when using subjective indicators.

For example, AW-poverty rates, which measure the inability to adequately heat one’s home, range between almost zero in Sweden and Luxembourg to about 40% in Bulgaria.

A similar trend is observed when analyzing arrears on utility bills (UB), while income shares of residential energy expenditure that are above twice the national median (2M) appear to be more similar across countries, indicating that energy poverty rates range between approximately 10% (Netherlands, Hungary) to slightly above 20% (Sweden, Malta, and Latvia).

This underscores the importance of tailored policy responses that consider national contexts and differences across countries regarding income levels, energy prices or investments in energy capital (i.e. efficient appliances, insulation, etc.). Moreover, this result points to the need to consider carefully what is the most suited indicator for cross-country comparisons.

How to tackle energy poverty across the EU?

Energy poverty has far-reaching consequences, from exacerbating health issues to limiting social and economic participation. Monitoring energy poverty is crucial for understanding the diversity of the socio-economic profiles of the energy poor and for improving the design of inclusive policies. Relying on a single indicator may overlook significant portions of the population experiencing energy-related deprivations.

To address energy poverty requires a policy mix

Income-support policies are essential to tackle energy poverty situations, especially for households under the poverty line. However, considering that middle-income households also experience a relatively high incidence of energy poverty, other types of policies may be warranted to support them.

This is the case of price caps, which reduce the burden of expenditures on energy goods, or structural interventions that step-up energy efficiency by reducing the need for energy consumption. Further, monetary policies such as subsidies to improve energy efficiencies could also reduce the burden of energy expenditures on households.

Finally, behavioral levers, such as assisting consumers in setting goals for reducing energy consumption through apps and educational campaigns to empower individuals to make investment choices that improve energy efficiency, may also be effective in reducing the energy poverty phenomenon.

Top European airlines Lufthansa, KLM and Swiss on Tuesday announced that they were extending their suspension of flights to the Middle East, as tensions spiral throughout the region.

The moves come as Israel launched strikes on Beirut and a senior White House official warned that Iran was preparing to launch a ballistic missile attack “imminently” against Israel.

KLM has pushed out until the end of the year the suspension of its once-daily flight to Tel Aviv “given the situation in the region”, spokeswoman Elvira van der Vis told AFP.

The Dutch airline had already announced in August that it was suspending flights to Israel until October 26.

Also on Tuesday, German airline group Lufthansa said it was suspending flights to Beirut up to and including November 30.

Lufthansa group flights to Tel Aviv will be cancelled until October 31 while trips to Tehran remain cancelled until October 14.

“We regret the inconvenience caused to our passengers,” the group said.

Later on Tuesday the Lufthansa group said that it had also decided to “avoid Iranian, Iraqi and Jordanian airspace up to and including 2 October”, adding that “flights will continue to avoid Israeli airspace up to and including 31 October”.

The Lufthansa group—whose carriers also include Swiss International Air Lines, Austrian Airlines and Brussels Airlines—has repeatedly modified its flight schedule in recent months due to heightened tensions in the Middle East, as have other airlines.

Following the example of its parent company, Swiss said the extension of its flight suspensions was “intended to provide more predictability for both our passengers and our crews”.

The Israeli army said it had launched a ground offensive in Lebanon and that its forces engaged in clashes on Tuesday, further escalating the conflict after a week of intense air strikes that killed hundreds.

Meanwhile, a senior White House official told AFP on condition of anonymity that the United States has indications that Iran was preparing to launch a missile attack against Israel “imminently”.

“We are actively supporting defensive preparations to defend Israel against this attack,” the official said, warning that such an action would “carry severe consequences for Iran”.

© 2024 AFP

Public discourse campaigns often promote social responsibility, but do such discussions also impact our market behavior? Economists at the University of Zurich have published a new study that shows that engaging in public discourse increases socially responsible market behavior—regardless of participants’ social norms and values.

Movements such as Fridays for Future and organizations such as the World Economic Forum support discussions on how consumers and firms can take action to mitigate climate change. Behavioral economists at the University of Zurich have now investigated whether and how such public discourse influences consumer behavior.

The study is published in the journal American Economic Review.

“We wanted to find out how to increase the market share of socially responsible products,” says study author Björn Bartling. “In our experiments, we were able to observe that engaging in public discourse prior to a purchase results in more socially responsible behavior, even if it incurs personal costs.”

Experiments reveal effects of communication

The researchers conducted three lab experiments, in which close to 2,500 participants in 187 fictitious markets took on the roles of buyers, sellers and third parties who weren’t part of trading but still affected by it. They traded goods that varied in their social impact.

In all experiments, sellers and buyers could choose between harmful products that cost less to produce but create external harm or responsible products with higher production costs but no external harm. Before making their decision, the participants were able to engage in discussion with each other.

In the experiments, the researchers observed a significant increase in trade with fair products when participants had engaged in different forms of discourse compared to the baseline condition in which there had been no discourse. The only situation that yielded no increase in socially responsible market behavior was when participants were able to avoid discourse altogether.

“Our findings illustrate how important active participation in public discourse is for initiating meaningful changes in market behavior,” says Bartling.

Different market, similar results

The experiments were carried out in Switzerland and China, where, according to previous studies, socially responsible market behavior is less pronounced. In China, too, previous engagement in public discourse resulted in a clear increase in market social responsibility. The market share of products traded fairly was at roughly the same level in China as in Switzerland.

Lab studies have their limitations when it comes to measuring the diverse impact of public discourse. Factors such as nationality and differences in income among market participants that may make it more difficult for discourse to yield sustainable agreements were not considered in the study, the authors emphasize.

“Nevertheless, our findings provide valuable insights into the mechanisms underlying socially responsible market behavior and show that public discourse has the potential to promote socially responsible behavior,” says Bartling.

The high cost of installing heat pumps for home heating could slow down people widely adopting the technology and leave government targets missed, research suggests. There has been a little to no reduction in the average installation cost of the green heating systems over the past decade in the UK, a study shows. The study is published in the journal Applied Energy.

Although projections suggest a reduction of 20 to 25% in installation costs by 2030, this falls significantly short of the targets set by UK policymakers, researchers say. Domestic heat pumps currently play a marginal role in heating UK homes, experts say. The number of installations is growing, but remains low compared with traditional, fossil fuel-based heating systems.

Researchers say the findings highlight the need for policy aspirations to be based on realistic assessments of likely cost reductions, and to develop incentives that can address the relatively high upfront costs of some low carbon technologies.

As well as decarbonizing home heating, advocates for heat pumps say they offer energy security and efficiency benefits, and can offer lower and more stable energy bills.

Researchers at the University of Edinburgh and Imperial College London used systematic evidence review techniques to analyze historical and forecast data for the installation costs of domestic heat pumps. They included the different factors that can affect heat pump cost data such as the type of home, technology design and the wider heating system. They also assessed equipment and non-equipment costs, and the factors affecting them such as international manufacturing supply chains and local labor markets.

They found there has been no significant reduction in the average installed cost of heat pumps over the past decade in the UK, while modest cost reductions were seen internationally. However, there are prospects for reduced installed costs in the UK, they said.

Dr. Mark Winskel, of the University of Edinburgh’s School of Social and Political Science, said, “While there is a growing policy consensus that heat pumps will pay a key role in decarbonizing home heating, there are some stubborn economic challenges. Our research suggests the need for realistic expectations about heat pump installed cost reductions, and also, introducing targeted support measures to reflect their competitive running costs and wider benefits.”