How can the multi-dimensional concept of Energy Poverty be adequately measured at the European level?
Energy poverty is defined as a situation in which households are not able to adequately heat their homes or meet other required household energy services at an affordable cost. Research suggests that energy poverty has important consequences if not addressed, such as impacting health, further entrenching poverty and making other objectives less attainable, e.g. addressing climate change. However, much of the current understanding is based on proxy indicators, relating to consensual survey-based approaches. The aim of this study was to support the European Commission to better understand energy poverty by improving EU-wide data collection and monitoring.
The project shortlisted 15 specific metrics, which tried to reflect the use of metrics in the literature and to capture different aspects of energy poverty. These metrics were then applied to four Member States (Spain, Italy, the Netherlands and Slovakia) and evaluated. The study analysed how each indicator behaved in each country and in a given period, which allowed to drop a few that did not convey useful information, namely those that presented little variation, those that captured a high amount of rich households and those that had excessively low or high levels. The chosen indicators cover two different aspects contained in the definition of energy poverty: those households for which energy costs represent a high burden in the budget, and households that cannot afford consuming a minimum required level of energy. This choice was validated with econometric models, which showed that these metrics related in meaningful ways to various supporting indicators. Moreover, interviews with experts in various countries also help qualify this choice and list the pros and cons of each metric.
The study concluded suggesting four indicators as the most suitable to assess primary energy poverty
The four selected indicators define a household as energy poor if:
- Its share of income spent on energy services is larger than twice the national median.
- Its income after energy costs falls below poverty line AND the share of its income spent with energy is above the national
- Its energy expenditure is lower than half the national median energy spending.
- It declares not to be able to warm the house during cold season.
At last, the study also explored the options for the development of an energy poverty tool. This tool could facilitate monitoring and comparing energy poverty, its drivers and outcomes, and at the same time provide information on measures addressing energy poverty.