Opinion - 01/April/2020

A just transition can help end energy poverty

The clean energy transition needs to be fair to everyone, with laws and financing to ensure the poorest households are not penalised by the switch from fossil fuels to renewables and benefit from the change, argues Marilyn Smith, Founder & Executive Director of The Energy Action Project

Relative to income, energy use and energy prices have a greater impact on the household budgets of poorer people

 

Today, April 1, 2020, marks the fifth anniversary of a day when energy prices changed daily life for 43 million people across Ukraine. Cold at Home, a short documentary film produced by The Energy Action Project (EnAct), follows the story of Katerina Nykonyvna, a 75-year-old pensioner, as she struggles through her first winter after a gas price increase of 280%. Past and present bills spread on the table, Katya shows that gas and electricity now eat up €68 of her monthly pension of €75. “There is nothing left to live on,” she says.

Katya saw this coming and prepared as much as possible. Throughout the summer and autumn of 2014, she spent long days growing and canning fruits and vegetables to secure her winter food supply. The return of her son, Stephan, to renovate the house built to be a summer dacha became a Catch-22. It meant Katya couldn’t close off rooms that were too cold to live in, and space heaters and watching home improvement videos via the Internet drove up the electricity bill.

Sunday morning revealed how energy poverty leads to social isolation. While neighbours went to church, Katya sat alone in her kitchen, unable to afford to buy a candle to say a prayer.

 

ENERGY POVERTY IN THE EU

In Ukraine, energy poverty is linked to long-term energy policy, geopolitics and international finance. For decades, Ukraine has earned substantial revenues as the transit country for oil and gas moving from Russia to Europe. In turn, the government supplied gas to citizens at extremely low prices. From 2014 to 2015, with the war in Donetsk breaking out and the economy crippled, the government turned to the International Monetary Fund for a loan: eliminating gas subsidies was a pre-condition, with no option to slowly reform pricing to give people time to adapt.

Elsewhere, a variety of factors lie behind people being unable to afford enough energy to support health and well-being. In the UK in the 1970s, Dr Brenda Boardman identified three underlying factors: the relationship between energy prices, income level and quality of dwellings — poor quality homes require more energy than they should and are often inhabited by people with low incomes. This means that relative to income, energy use and energy prices have a greater impact on the household budgets of poorer people. Initially, the UK reacted effectively, placing energy efficiency obligations on energy companies and using revenues from this mechanism to improve the efficiency of the worst homes.

Fast-forward 30 years and different causes have come to the fore across EU countries, which highlight the need within the just transition to fully consider how energy policies might affect the most vulnerable households.

  • In Romania, some 400,000 rural households have never been connected to electricity grids. People spend up to 50% of meagre incomes on batteries and diesel for generators.
  • In Hungary, district heating leaves people in Budapest with no control of indoor temperature and bills are charged by size of living space, not actual consumption. In the city’s suburbs, with gas prices rising, people have returned to burning wood in old, inefficient stoves.
  • In Spain, policies to transition to renewables were coupled with efforts to prompt citizens to switch from gas to electricity for home heating and cooling. From 2008 to 2012, electricity prices rose by 63% as domestic consumption increased, with the share of household budgets spent on electricity rising by 33%. With the economic crisis in full force, many households had dramatically reduced incomes: by 2012, 25% of people could not afford to stay comfortably cool in summer. This situation highlights the need to carefully manage the costs of an EU-wide clean energy transition.
  • Sweden is among the Nordic countries arguing against the inclusion of energy poverty in EU directives, saying it is not a widespread problem. Yet those who live closest to hydro stations spend substantial amounts on back-up equipment to cope with blackouts they know will come and which can last from several hours to a few days. Some have suffered devastating economic hits.

The just transition commits, from the outset, to fully consider vulnerable households when setting future energy policy.

 

COSTS OF COLD HOMES

Energy poverty has important impacts on health and on healthcare costs.

In 2013, the UK’s Buildings Research Establishment examined what hazards in a home led to costs for the National Health Service (NHS). Of a total £1.4 billion annual costs, £848 million were associated with people being chronically cold, a situation which contributes to high-cost interventions for respiratory and coronary complications.

Eradicating energy poverty and associated health costs has been the aim of Ireland’s Warmth and Well-being Scheme. With a budget of €20 million, the project performed deep energy renovations on around 850 poor quality homes. Data from previous schemes show that improving the building energy rating from E1 to B2 (typically costing around €20,000) can deliver annual energy bill savings of €2500.

This improvement frees up around €200 a month, an immediate, substantial difference for low-income households. The scheme allows health practitioners to refer patients with chronic health problems due to cold and damp for housing upgrades. A physician can now tackle the root problem at once, rather than minimising symptoms for years on end. The scheme prioritises homes with residents over 55 years of age or children with respiratory problems.

 

 

RENOVATION WAVE

With its pledge to “leave no one behind”, while massively transforming the EU economy, the European Green Deal sets a massive challenge, particularly in relation to the production and consumption of energy. Large-scale transition to clean energy systems will carry heavy costs. At present, the way such costs are passed on to consumers plays a significant role in the reality that 50 to 100 million EU citizens live in energy poverty. The Green Deal acknowledges the need to massively renovate the EU building stock to reduce energy demand and emissions, while also upholding a just transition by lifting people out of energy poverty. The European Commission will reveal its plan for a Renovation Wave in the autumn of 2020.

  • Boosting the renovation rate to 3% annually (from 1% at present), and sustaining that level until 2050, would, says Renovate Europe, slash energy demand in buildings by 80% (reducing overall EU demand by 30%) and drastically cut related emissions. Bringing all buildings up to current efficiency standards would require investment of €1 billion a day, every day, until 2050.

At present, Renovate Europe finds an annual funding gap of €130 to €200 billion. A significant challenge is that 80% of investment is needed on the demand side and 71% must be directed to the residential sector, which is particularly difficult to renovate because it means millions of small projects on homes with unique features.

 

A NEW MODEL FOR ENERGY REPORTING

EnAct’s tagline “Reporting that seeks to empower”, reflects its aim to foster cross-sector collaboration in tackling energy poverty, while also helping public audiences better understand this issue and energy more broadly. EnAct distils key elements of lengthy reports into content that connects the dots across academic research, policy initiatives, civil society and social impact projects, and financial schemes.

As actors around the world take up the challenge of achieving universal access to sustainable, affordable energy (Sustainable Development Goal 7), EnAct’s mantra is that it is time for everyone to get energy.

The Green Deal is an unprecedented opportunity to enhance energy security across the EU and deliver to all citizens the many benefits of clean energy. Application of just transition principles will help ensure everyone can afford enough energy for health and well-being.

 

Follow EnAct on social media to learn more: Twitter: @EnActNow / Instagram: @everyday_energy


The views expressed in this opinion are those of the author and do not necessarily reflect the position of FORESIGHT Climate & Energy

Do you have a thoughtful response to the opinion expressed here? Do you have an opinion regarding an aspect of the global energy transition you would like to share with other FORESIGHT readers? If so, please send a short pitch of 200 words and a sentence explaining why you are the right person to deliver this opinion to opinion@foresightdk.com.

 

Share


Related articles

Coal-reliant regions around the world have been generally resistant to the energy transition and regulators have tended to defend the status quo. But they are slowly starting to realise that clear plans and financial support for disrupted societies are more important

A fair and just energy transition

Coal-reliant regions around the world have been generally resistant to the energy transition and regulators have tended to defend the status quo. But they are slowly starting to realise that clear plans and financial support for disrupted societies are more important

Read more

What will it take to start — and sustain — a renovation wave?

With the European Commission planning to announce details of a building “renovation wave” in the autumn of 2020, Susanne Dyrboel, vice-chair in Renovate Europe explains what the EU executive should be considering to make its vision reality

Read more

Changed political dynamics could threaten energy efficiency

Populist politics must not be allowed to interfere with EU plans to increase energy efficiency gains in buildings, argues Adrian Joyce, Director of the Renovate Europe Campaign

Read more

New Mexico’s ways of managing a just transition for the climate and workers is being watched closely across the US

How a just transition for US coal workers is becoming reality

New Mexico’s ways of managing a just transition for the climate and workers is being watched closely across the US

Read more

Governments should step in to make homes energy efficient

National governments are failing their citizens, ignoring their international emissions reduction pledges and leaving banks open to greater financial risk by not renovating homes, says Céline Carré, President at EuroACE and Head of European Public Affairs at Saint-Gobain

Read more

Just Transition Fund needs all EU countries to ditch coal

The Just Transition Fund presents an opportunity to get the EU on track towards climate neutrality, but only if it requires all countries to present phase out plans for high-emission technologies like coal burning, argues Rebekka Popp, researcher at the climate change think tank E3G

Read more

The energy transition solution right over our heads

Solar power contributes to a decarbonised society and, due to its continually decreasing price, allows European households to save money on electricity bills, says Walburga Hemetsberger, CEO of SolarPower Europe, as her organisation launches a campaign to get solar panels installed on all new and renovated buildings

Read more

Boosting the cool factor of energy efficiency

Exciting new technology, equipment and greater political will help boost the image of energy efficiency, a vital tool in reducing emissions, says Jennifer Layke, US-based Global Director of the Energy Programme at the World Resources Institute

Read more

Just Transition: act now before industries and communities decline

Prioritising renewables and abolishing fossil fuels should not be at the expense of people’s lives and networks

Read more

Building efficiency is crucial to a fair energy transition

Standards forcing landlords to make buildings more energy efficient would benefit the climate and tenants, say Jan Rosenow from the Regulatory Assistance Project (RAP) and Sibyl Steuwer from the Buildings Performance Institute Europe

Read more