Crisis proportions: EU energy markets impacting energy poverty
People across the world are experiencing energy poverty, and a new study by the European Commission (EC) has found that as many as 11 percent of the European Union's (EU) population may fall in that category. Energy poverty is when a household cannot adequately heat their homes at an affordable cost.
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Drivers of energy poverty and key indicators. Click on image to enlarge. Credit: European Commission |
The study also found that many EU countries do have measures in place to fight energy poverty, but many citizens are still not immune. According to the study, in 2012, around 54 million people in Europe were affected -- due to many things, including rising energy prices, low income, and poor energy efficient homes. Although customers across all EU countries are affected, those in Central Eastern and Southern Europe are most likely to be energy poor.
"Under the EU's so-called Third Energy Market Package, the responsibility for addressing energy poverty, identifying vulnerable consumers and putting measures in place lies with national governments," EC said in a statement. "However, a number of EU countries do not currently identify or quantify vulnerable consumers, and therefore cannot adequately target energy poverty measures. Less than a third of EU countries officially recognize energy poverty, and only a few have an official definition in their national legislation."
According to the report, the risk factors for energy customers to fall into energy poverty include: the rate of energy price rises versus income growth, ability to access to cheaper energy prices, household energy needs, efficiency of energy use, and policy interventions
The study also looked at possible solutions to the crisis, and found that financial interventions are an important tool for short-term protection of customers. However, to support them in the longterm, energy efficiency measures and building codes will be crucial to solve the problem. The study explained that encouraging energy efficiency among low-income households, and raising awareness, will be needed to help solve the problem. Companies should also be focused on showing customers their pricing comparisons and energy use, to help them make energy decisions.
"It is important that Member States recognise and address this problem, as ensuring basic energy services is critical to ensure that communities do not suffer negative health impacts, do not become further entrenched in poverty, can maintain a good quality of life, as well as ensuring the financial outlay to assist households that require support does not become too burdensome," the report said. "While allowing for full competition in energy markets, Governments and regulators have a role to protect the most vulnerable communities, and prevent groups in society falling into energy poverty. The functioning of energy markets can clearly have an impact on this situation, through ensuring consumer protection and safeguards, offering competitive tariffs (and access to them) and assisting in the efficient use of energy."
The next step is for each individual country to look at their vulnerabilities in order to create proper regulations -- something the EC is planning to help countries with.
The six recommendations the report made for the EC to help member nations include:
- Recognizing that the issues of vulnerable consumer protection and energy poverty are distinct
- Providing additional guidance on what constitutes vulnerable consumers (based on Member States' experiences)
- Explicitly defining what energy poverty is and urge Member States to act to alleviate it, but without prescribing the metric to be used by Member States
- Developing a database of measures used by different Member States, relating to vulnerable consumer protection and energy poverty
- Supporting actions that promote the targeting of energy efficiency measures to address energy poverty
- Developing data reporting mechanisms that allow for improved indicators for measuring energy poverty
"The Commission also facilitates the exchange of best practices via the Citizen's Energy Forum and the Vulnerable Consumer Working Group," EC said in a statement. "Moreover, the Commission is set to issue recommendations to national goverments on how to help vulnerable consumers through energy efficiency and other measures."
The study also suggested that the European Commission should be financially responsible for programs to help energy poor customers.
For more:
- view the
full report
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