Lack of (knowledge on) targeted policy instruments to alleviate energy poverty
Created on 17-10-2023
Policy and financing
Across Europe, government response to the energy crisis has been largely untargeted. This is problematic, because of its inefficiency, unsustainability, inequity, and imprudence. It has incurred substantial costs, lowered incentives for energy saving among higher earners, redistributed regressively, and caused inflationary pressures. The pervasiveness of this untargeted approach can be attributed to the challenges governments face with outdated welfare systems, making the realisation of 'just transition' principles more difficult. A more targeted approach, while crucial, demands a higher level of administrative capacity and is politically more challenging to sell compared to a policy that benefits everyone broadly. However, an increasingly shared viewpoint advocates that the climate transition and its broader societal transformation necessitate government intervention to ensure equitable outcomes. Recent developments, such as the EU’s announcement of a Social Climate Fund, underscore this need, aiming to support the most vulnerable 'energy poor' households through targeted renovation subsidy schemes, retrofitting of social housing, and direct financial assistance. Nonetheless, many Member States lack sufficient experience and knowledge about effective policy instruments for implementation, emphasising the necessity for further research and experimentation in this domain.
System knowledge
Actors
National government
This actor represents the central governing body and authority responsible for overseeing and managing the affairs of a nation, including policymaking, legislation, and implementation within a certain geographic area.
Local government
This denotes the administrative authority responsible for governing and managing local affairs within a specific geographic area, such as a city, town, or district, through local policies, regulations, and services.
Social housing provider
An entity, often a governmental or non-profit organisation, responsible for offering affordable housing options and related services to individuals or families in need within a community or society.
Method
Policy reform
This refers to the process of making changes, revisions, or amendments to existing policies, laws, or regulations to improve their effectiveness, relevance, or desirability of outcomes.
Capacity building
Enhancing the knowledge, skills, resources, and abilities of individuals and/or organisations to effectively address challenges and implement improvements, such as policy reform.
Tools
Social cost-benefit analysis
This involves evaluating and comparing the societal costs and benefits associated with a particular policy, project, or initiative to inform decision-making and determine its overall impact and effectiveness in achieving certain goals.
Target knowledge
Topic
Energy poverty
Energy poverty refers to the condition where households struggle to meet their basic energy needs for participation in society due to factors such as low income, high prices, poor energy efficiency, and specific energy needs.
Dimension
Governance
This involves networks, systems and processes that steer decision-making, service delivery and policy implementation.
Level
Country
The political structure governs a specific geographical area and accommodates a specific population group.
Transformational knowledge
No references
Related cases
The Social Climate Fund: Materialising Just Transition Principles?
Created on 11-07-2023
The EU's Social Climate Fund (SCF) was officially approved by the European Parliament on 18 April 2023 as part of the broader Green Deal initiative, which seeks to expand the scope of the Emission Trading Scheme (ETS) to encompass buildings, transport and other sectors. This extension of the ETS is expected to result in increased energy costs and gasoline prices for households and businesses. To assist vulnerable households, micro-enterprises, and transport users in mitigating the financial impact of these price increases, EU Member States may use resources from the SCF to finance various measures and investments. The SCF will primarily be funded through the revenues generated by the new emissions trading system, with a maximum allocation of €65 bn, which will be supplemented by national contributions. Temporarily established for the period of 2026-2032, the fund aims to provide support during this specified timeframe.
Preliminary Exploration of Merits and Limitations
The initiation of the SCF has received praise from various NGOs advocating for a just transition (WWF, 2022). Supporters highlight its significance in integrating a social dimension into EU climate policies, despite some remaining weaknesses. The SCF’s spending rules are commended for striking a suitable balance between financing structural investments and providing temporary direct income support to vulnerable households. Through the SCF, Member States can finance subsidies that will enable these households to renovate their homes, adopt energy-efficient technologies, and access renewable energy and sustainable transportation. Moreover, various NGOs welcome the requirement for government consultation with subnational administrations and civil society organizations. This could potentially facilitate greater engagement of the target groups in the legislative process. Notably, the SCF also introduces a definition of transport poverty, marking a first in EU policy, and aiding member states to identify those eligible for support (thereby improving recognitional justice).
Regarding the aforementioned weaknesses, there is a range of concerns. Firstly, the projected timeline may pose a limitation. Initiating green investments for vulnerable households only a year before the introduction of carbon pricing may not allow sufficient time for the desired impact. Projects related to energy renovation and improved public mobility infrastructure typically require several years to yield tangible results. Additionally, while Member States are required to include consultation with various stakeholders in their national ‘Social Climate Plans’ (SCPs), the level of participation outlined in the proposed regulation is minimalistic, raising concerns about ensuring procedural justice.
Perceived Importance of Targeting
The legislative text (EU, 2023) underscores the significance of consistent targeting, and Member States are required to furnish comprehensive information regarding the objective of the measure or investment and the specific individuals or groups it aims to address. Additionally, the European Commission expects an elucidation of how the measure or investment will effectively contribute to the accomplishment of the Fund's objectives and its potential to reduce dependence on fossil fuels.
Targeting is deemed particularly crucial with regard to direct income support, as universal energy support tends to generate inflationary pressures, encourage unsustainable behaviour, and yield regressive effects. The legislative text states that is crucial to perceive such support as a temporary measure accompanying the decarbonisation of the housing and transport sectors, rather than a permanent solution that fails to address the fundamental causes of energy poverty and transport poverty. Thus, this support should exclusively target the direct consequences of including greenhouse gas emissions from buildings and road transport under the purview of Directive 2003/87/EC, without encompassing electricity or heating costs related to power and heat production covered by the same directive. As stated, "recipients of direct income support should be targeted, as members of a general group of recipients, by measures and investments aimed at effectively lifting those recipients out of energy poverty and transport poverty" (EU, 2023: p.4).
The share of the SCF designated for renovation projects should also be specifically directed at the vulnerable households and transport users who are already receiving direct income support. SCPs are allowed to extend support to both public and private entities, including social housing providers and public-private cooperatives, in developing and providing affordable energy efficiency solutions and suitable funding mechanisms that align with the social objectives of the Fund. This support could include ‘financial assistance’ or even ‘fiscal incentives’, which poses the question of how lenient should the approach of the European Commission be towards the state support of social housing organisations, given the tensions that have emerged in the past (Gruis & Elsinga, 2014).
Ex Ante and Ex Post Assessment of Social Climate Plans
EU Member States are required to submit national Social Climate Plans (SCPs) no later than 30 June 2025, so that they can be given “careful and timely consideration”. The plans should encompass an investment component that promotes the long-term solution of reducing reliance on fossil fuels, potentially incorporating additional measures, such as temporary direct income support, to alleviate any immediate adverse effects on income.
The primary objectives of these plans must be twofold. Firstly, they should provide vulnerable households, vulnerable micro-enterprises, and vulnerable transport users with the necessary resources to enable them to finance and undertake investments in energy efficiency, the decarbonisation of heating and cooling systems, the adoption of zero- and low-emission vehicles, and sustainable mobility. This support may be provided through mechanisms such as vouchers, subsidies, or zero-interest loans. Secondly, the plans should mitigate the impact of rising fossil fuel costs on the most vulnerable segments of society, thus fighting energy poverty and transport poverty during the transitional phase until the aforementioned investments have been implemented.
The legislative text contains comprehensive information concerning the criteria utilised to assess the SCPs upon submission and evaluation after implementation. The set of ‘result indicators’ that are specifically relevant to the 'building sector' can be found in the table accompanying this case study. Time will tell whether this framework is sufficient to ensure that besides ‘recognitional justice’ and ‘procedural justice’, the SCF will make sure that the European Green Deal delivers ‘distributive justice’.
Related vocabulary
Housing Governance
Just Transition
Area: Policy and financing
The shift from ‘government’ to ‘governance’ has been debated since the early 1970s. Whilst state interventionism had been widely embraced within western societies during the post-war decades, governments gradually moved from exercising constitutional powers to acting as facilitators and cooperative partners (Rhodes, 1997). Over the course of a few decades, this resulted in governance as ‘interactive social-political forms of governing’ (Nag, 2018, p. 124). Hira and Cohn (2003, p. 12), influenced by Keohane (2002), define governance as “the processes and institutions, both formal and informal, that guide and restrain the collective activities of a group”. Its decentralised and flexible nature could still include public actors but would also leave space for private and third-sector parties to provide services in hybrid and temporary institutional arrangements.
To formulate one single definition of ‘housing governance’ as a particular mode of governance is however difficult due to its multilevel character. Housing could relate to either a family home, a housing association, or a complete local/national housing governance framework. On a household level, Wotschack (2005, p. 2) defines governance as managing “the daily time allocation of spouses by household rules and conflict handling strategies”. The work of Wijburg (2021) indicates that local/municipal governance entails a set of public interventions, strategies, policies and provisions used to provide local needs (e.g. housing supply). On the national level, Yan et al. (2021) define public rental housing (PRH) governance as “a structure of a wide range of government and non-governmental actors that act in all its phases of PRH provision from policy design to implementation and realisation”.[1] This specific definition on PRH combines the domestic definition of governance with Wijburg’s understanding of governance on the local level. Within the Chinese context, the national government provides policies and creates nationwide operational methods, whilst local governments implement and formulate the policies locally (Yan et al., 2021).
Critics point out that a more decentralised governance structure complicates the public accountability of housing provision. Peters and Pierre (2006, p. 40) distinguish problems concerning the ‘isolation’ and ‘enforcement’ of accountability. The former refers to demarcation, as it is easier to measure the performance of a government housing agency directly responsible for new build and operations, than those from the private sector in an indirect role trying to stimulate and facilitate other actors and contracting out construction and operations (Shamsul Haque, 2000). The latter relates to the accountability deficit that arises when responsibility is transferred from democratically governed municipal agencies to actors without a representative institutional arrangement, and thus without control mechanisms for tenants or the wider population (Mullins, 2006).
Throughout history, understanding of governing has evolved together with the role of government. The state plays a different role in capitalism, corporatism and socialism, which has varying effects on local and/or (inter)national levels. Whilst the above paragraphs describe housing governance within a democratic governance regime, transferring the conceptual debate to autocratic or hybrid regimes would pose difficulties. Thus, finding a unique definition of housing governance applicable in all spheres remains a challenge, and the specific context must be carefully considered. Important challenges remain, and as housing provision mechanisms evolve, further exploration of housing governance, especially on a municipal level, are likely to gain importance (Hoekstra, 2020).
[1] “Housing provision is a physical process of creating and transferring a dwelling to its occupiers, its subsequent use and physical reproduction and at the same time, a social process dominated by the economic interests involved” ibid.
Created on 16-02-2022
Read more ->Area: Policy and financing
Justice theory is as old as philosophical thought itself, but the contemporary debate often departs from the Rawlsian understanding of justice (Velasquez, Andre, Shanks, & Meyer, 1990). Rawls (1971) argued that societal harmony depends on the extent to which community members believe their political institutions treat them justly. His First Principle of ‘justice as fairness’ relates to equal provision of ‘basic liberties’ to the population. His Second Principle, later referred to as the ‘Difference Principle’, comprises unequal distribution of social and economic goods to the extent that it benefits “the least advantaged” (Rawls, 1971, p. 266).1[1] As this notion added an egalitarian perspective to Rawlsian justice theory, it turned out to be the most controversial element of his work (Estlund, 1996).
The idea of a ‘just transition’ was built on these foundations by McCauley and Heffron (2018), who developed an integrated framework overarching the ‘environmental justice’, ‘climate justice’ and ‘energy justice’ scholarships. The term was first used by trade unions warning for mass redundancies in carbon-intensive industries due to climate policies (Hennebert & Bourque, 2011), but has acquired numerous interpretations since. This is because the major transition of the 21st century, the shift towards a low-carbon society, will be accompanied by large disturbances in the existing social order. In this context, a just transition would ensure equity and justice for those whose livelihoods are most affected (Newell & Mulvaney, 2013). A just transition implies that the ‘least advantaged’ in society are seen, heard, and compensated, which corresponds with three key dimensions conceptualised by Schlosberg (2004): distributive, recognitional, and procedural justice.
Distributive justice corresponds with Rawls’ Difference Principle and comprehends the just allocation of burdens and benefits among stakeholders, ranging from money to risks to capabilities. Recognitional justice is both a condition of justice, as distributive injustice mainly emanates from lacking recognition of different starting positions, as well as a stand-alone component of justice, which includes culturally or symbolically rooted patterns of inequity in representation, interpretation, and communication (Young, 1990). Fraser (1997) stressed the distinction between three forms: cultural domination, nonrecognition (or ‘invisibility’), and disrespect (or ‘stereotyping’). Procedural justice emphasises the importance of engaging various stakeholders – especially the ‘least advantaged’ – in governance, as diversity of perspectives allows for equitable policymaking. Three elements are at the core of this procedural justice (Gillard, Snell, & Bevan, 2017): easily accessible processes, transparent decision-making with possibilities to contest and complete impartiality.
A critique of the just transition discourse is that it preserves an underlying capitalist structure of power imbalance and inequality. Bouzarovski (2022) points to the extensive top- down nature of retrofit programmes such as the Green New Deal, and notes that this may collide with bottom-up forms of housing repair and material intervention. A consensus on the just transition mechanism without debate on its implementation could perpetuate the status quo, and thus neglect ‘diverse knowledges’, ‘plural pathways’ and the ‘inherently political nature of transformations’ (Scoones et al., 2020). However, as Healy and Barry (2017) note, understanding how just transition principles work in practice could benefit the act of ‘equality- proofing’ and ‘democracy-proofing’ decarbonisation decisions.
Essentially, an ‘unjust transition’ in the context of affordable and sustainable housing would refer to low-income households in poorly insulated housing without the means or the autonomy to substantially improve energy efficiency. If fossil fuel prices – either by market forces or regulatory incentives – go up, it aggravates their already difficult financial situation and could even lead to severe health problems (Santamouris et al., 2014). At the same time, grants for renovations and home improvements are poorly targeted and often end up in the hands of higher income ‘free-riding’ households, having regressive distributional impacts across Europe (Schleich, 2019). But even when the strive towards a just transition is omnipresent, practice will come with dilemmas. Von Platten, Mangold, and Mjörnell (2020) argue for instance that while prioritising energy efficiency improvements among low-income households is a commendable policy objective, putting them on ‘the frontline’ of retrofit experiments may also burden them with start-up problems and economic risks.
These challenges only accentuate that shaping a just transition is not an easy task. Therefore, both researchers and policymakers need to enhance their understanding of the social consequences that the transition towards low-carbon housing encompasses. Walker and Day (2012) applied Schlosberg’s dimensions to this context. They conclude that distributive injustice relates to inequality in terms of income, housing and pricing, recognitional justice to unidentified energy needs and vulnerabilities, and procedural injustice to inadequate access to policymaking. Ensuring that the European Renovation Wave is made into a just transition towards affordable and sustainable housing therefore requires an in-depth study into distributive, recognitional and procedural justice. Only then can those intertwining dimensions be addressed in policies.
[1] To illustrate his thesis, he introduces the ‘veil of ignorance’: what if we may redefine the social scheme, but without knowing our own place? Rawls believes that most people, whether from self-interest or not, would envision a society with political rights for all and limited economic and social inequality.
Created on 03-06-2022
Read more ->Blogposts
Summer in the City
Posted on 13-06-2023
Last week I had the pleasure of attending the International Social Housing Festival (ISHF) in Barcelona alongside fellow network members and 2,000 (!) other participants. The event encompassed a remarkable week filled with seminars, keynote addresses, and informal discussions centred around the core themes of RE-DWELL: housing affordability and energy renovation. I would like to dedicate this blog to a particular question posed during a panel discussion I took part in, which explored the intersection between alleviating energy poverty and mitigating heat stress, as it truly sparked some thinking.
On the final day of the conference, a warm Friday on June 9th, I had the privilege of participating in an event organized by Diana Yordanova from Housing Europe. The event, titled 'Working Formulas and Question Marks for Pathways Out of Energy Poverty,' kicked off with Alice Pittini, Housing Europe's research director, sharing insightful highlights from this year's State of Housing report. Additionally, a panel discussion on effective strategies for alleviating energy poverty took place, where I joined the stage alongside esteemed experts and practitioners such as Eleni Kanellou, Anu Sarnet, Sven Van Elst, and Sergi Delgado. During the event, I had the opportunity to present some of the findings from a collaborative research paper I am currently working on with Joris Hoekstra from TU Delft and Ute Dubois from ISG Paris. Our paper focuses on how social housing organisations can effectively reduce energy poverty among their tenants.
Then, moderator Diana, posed a twofold question: "What were the most efficient measures implemented by housing organisations to shield tenants from the energy crisis during the past winter? And as the hot months lie ahead, what should social housing organisations in countries like Spain, Portugal, and Greece keep in mind as they prepare to support tenants and residents in dealing with heat stress?"
Now, while I know that the energy poverty literature increasingly looks at the lack of insulation and appliances that prevent households from cooling their homes sufficiently in summer, most of the research (including my own) currently tends to focus on the inability to heat during cold winters. However, upon reflecting on these questions, I came to realise that many measures taken by housing providers to address energy poverty in winter months would also contribute to the prevention and mitigation of heat stress.
First and foremost, it is crucial to to identify those requiring urgent assistance, specifically the most vulnerable tenants. Having a clear understanding of where to concentrate efforts, particularly during periods of crisis, is vital for short-term interventions. In another enlightening session at the ISHF, focused on climate justice in the Mediterranean, I had the privilege of listening to Eleni Myrivili, the current Chief Heat Officer of the City of Athens. She eloquently elucidated how heat exacerbates inequalities and lays bare the disparities among various socio-economic groups. This resonates with our observations during the previous winter, as the brunt of these extreme weather events is borne by (largely the same) low-income households residing in energy-inefficient dwellings. Therefore, the initial step is to identify the most vulnerable tenants. Who are they? And where do they live?
Another interesting approach that emerged during the previous winter, particularly in the United Kingdom, was the establishment of warm hubs by social housing organisations and their charitable arms. Warm hubs are essentially community centres where individuals can gather, find comfort, receive blankets, access food, and, most importantly, avoid the need to excessively heat their homes and risk high energy bills. It requires little imagination to envision that warm hubs could serve as cool hubs during heatwaves, providing air-conditioned environments to those most susceptible to heat stress.
Hence, resident engagement represents a critical aspect for both cold winters and hot summers. When executed effectively, resident engagement can significantly reduce vulnerability and foster trust between landlords and tenants. Particularly after retrofitting measures, it is essential to educate and promote sustainable behaviours. New technologies can be challenging to comprehend, especially when individuals are already facing difficult circumstances or language barriers. Improving short-term resilience is thus facilitated by fostering engagement.
And finally, when considering long-term resilience in both winter and summer seasons, it is essential to address the most decisive solution: renovation. Particularly in Mediterranean regions, where extreme heat reaches unprecedented levels, the implementation of green roofs and facades becomes crucial to alleviate such conditions. Additionally, measures such as insulation and double glazing play a pivotal role in reducing vulnerability during both winter and summer months, and their implementation can be achieved within a relatively short timeframe. Therefore, accelerating Europe’s Renovation Wave should be an absolute priority.
This introspection has pushed me to expand my thinking beyond the confines of Western European countries and delve into the diverse contexts in which housing providers operate throughout Mediterranean Europe. Moreover, it has reminded me of my master's dissertation at King's College London, written during the strange (and hot) summer of 2020 amid the Covid-19 pandemic. In that research, I examined the vulnerability of residents in the Metropolitan Region Rotterdam The Hague to heat stress, considering numerous variables (find the output below). Perhaps it’s about time for me to revisit and re-evaluate this work once again!
Conferences
Read more ->