We are happy to see interest growing in the issue of energy poverty and especially in relation to energy efficiency. The Council of Europe Development Bank (CEB) recognizes the graveness of this issue, conducted a quantitative empirical analysis of energy poverty in Europe, its causes and how energy efficiency can help to fight it and published a report called Energy Poverty In Europe: How Energy Efficiency and Renewables Can Help. CEB found out that energy poverty rates are highest in Southern and Central-Eastern European countries but the problem still stays European-wide. Overall, CEB study claims that there is an estimation of 30 million people living in energy poverty in Europe.
CEB works with an unofficial definition of energy poverty as unreasonably high proportion of income spent on energy bills per household; or households that are unable to afford basic energy needs at all.
The study claims that main causes of energy poverty stem from low income, poor quality homes and energy inefficient appliances. The high rates of energy poverty correlate with higher at-risk-of-poverty rates, food poverty (inability to afford basic food staples) and higher rates of self-reported health issues.
Study’s findings and conclusions
CEB was looking at how energy prices and income levels influence household energy consumption. They conclude that in a short run, changes in prices of energy and household income levels have small impact on household energy consumption. On the other hand, in a long-term, demand for energy depends on prices and incomes following this logic:
Households may forgo using gas as an energy source if prices become too high. At the same time, rise in income is associated with an increase in the consumption of either electricity or gas and should help reducing energy poverty rates.
Energy efficiency of buildings is, however, not the final stage of the process. Once the buildings have sufficient household energy efficiency improvements, renewable energy becomes another driver combating energy poverty. It is predicted that as renewable energy technology develops and capacity increases, the marginal cost of renewables will continue to fall, making them affordable alternatives to conventional energy sources.
After a 10% increase in the household energy efficiency score:
- Household energy spending can decrease by 2.4% to 7.1%
- Energy poverty rates tend to drop by 2.1%
Moreover, after governments undertake and implement high impact energy efficiency policy, household energy consumption may drop by 4.4%. Other econometrics show that there is a direct effect of energy efficiency in helping reduce energy-related economic vulnerability.
Overall, CEB’s study shows that energy efficiency improvements and related regulatory policies contribute to decreasing in household energy consumption and energy poverty rates.
Find the full report here.
Find the press release about this report here.