Energy poverty – questions of definition

Poland, like the vast majority of European Union countries, lacks a fully formed definition of energy poverty or an official indicator to monitor the scale of this phenomenon (Owczarek, Miazga 2015). Energy poverty, in general, can be defined as the phenomenon of experiencing difficulties in satisfying basic energy needs in the place of residence at a reasonable price, without lowering the basic standards of biological and social functioning of household members (Owczarek, Miazga 2015).

Undoubtedly, energy poverty, apart from being related to the energy functioning of households, is associated with poverty understood in economic terms - as deprivation of access to material goods and resources, but these areas of deprivation should not be equated. The phenomenon of energy poverty should be considered in two aspects: financial and technical. The former is determined by household wealth and fuel prices, while the latter is conditioned by the technical capacity to heat dwellings (Szamrej-Baran, 2016). 

Causes of energy poverty

The problem of energy poverty is multidimensional, hence its solution cannot be encapsulated in a single sectoral policy and all the causes that foster the phenomenon should be analyzed. Three types of causes resulting in energy poverty are indicated (Węglarz, Kubalski, Owczarek 2014):

Technical causes

Technical causes - occur when a dwelling is characterised by a low level of energy efficiency, making it more demanding to maintain an optimal standard of heat. They may result from malfunctioning heating systems inadequate to heat the dwelling in question. In turn, higher energy consumption for heating entails higher expenditures and thus leads to a depletion of disposable household resources that can be allocated for other purposes (often also of a basic spending nature). Low energy efficiency of buildings and installations may also result in insufficient heating of the dwelling, so that an optimal standard of warmth cannot be met. Also energy inefficient household appliances, such as light bulbs, white and brown goods, can lead to a significant increase in expenses within the household budget. 

Economic causes

Economic causes - occur in the case of deprivation of economic resources, which can result in defaulting on energy bills as well as cutting off sources of energy or saving on heating to reduce the cost of energy bills. A household may be living in a building with optimal energy efficiency, functional heating and electrical appliances, but due to material deprivation, they are unable to maintain an optimal standard of warmth and cover other necessary energy expenses.

Causes related to attitudes towards efficient use of energy

Causes related to attitudes towards efficient use of energy - occur when inappropriate use of appliances leads to substantial energy losses and consequently to increased energy expenditure beyond the level that the household can afford. This group of causes takes cognitive, behavioral, and emotional dimensions. Such examples include ventilating a home with radiators " turned on " or leaving appliances that consume electricity on unnecessarily. Within this area, the main behavioural moderator is the knowledge about the efficient use of heating and electrical devices as well as the understanding of investments in more energy efficient devices (energy efficient light bulbs, thermal insulation of buildings, etc.).

Possible consequences of fuel poverty

There are many areas in which fuel poverty brings negative consequences. On a society-wide level, it generates public costs (healthcare, education system) and reduces the potential for development in terms of social and economic capital. In turn, bearing in mind the perspective of the individual, it adversely impacts physical health, but also mental health (Szamrej-Baran, 2016). It is known from the literature that energy poverty, which is expressed, among other things, in underheating of rooms and, as a result, leads, for example, to the growth of harmful microorganisms, results in a higher likelihood of respiratory diseases, allergies (in the case of excessively humid and fungal dwellings), hormonal and cardiovascular disorders, deterioration of mental well-being (stress, anxiety, depressed mood) or a general weakening of the body's immunity (Liddell, Morris, 2010). 

Other consequences of the phenomenon include households incurring debts and falling into a debt spiral. Energy poverty also contributes to housing degradation. Improperly insulated windows, walls and doors, cause heat loss and result in higher indoor humidity. Finally, it goes without saying that increased CO2 emissions from individual households, especially those that are energy poor and rely on inefficient heating, often using non-organic, low-quality fuels and old stoves, leads to poorer air quality (Szamrej-Baran, 2016). 

Reducing the scale of energy poverty is likely to bring proportional social, environmental and economic benefits, while pursuing the model of sustainable development, which is enshrined in many strategic documents, including the Basic Law.

Scale and scope of the phenomenon in Poland 

Energy poverty in Poland has not yet received a commonly accepted definition or an unquestionable measure. However, despite the lack of consensus among the research, academic, governmental and non-governmental communities, studies have been carried out that make it possible to initially determine its scale, taking into account the specific features of Central and Eastern Europe. Such research and analyses are carried out, among others, by the Institute of Structural Research, the Institute of Labor and Social Affairs, the Institute for Sustainable Development, the Institute of Public Affairs or the Social Research Laboratory of the Warsaw University of Life Sciences. Depending on the indicator applied, "the share of energy poor households oscillates between 2.2% and 18% (data for 2017). Moreover, different indicators identify different subpopulations as the most vulnerable in Poland. By way of example, objective indicators show that it is the residents of single-family houses who are most at risk of energy poverty, while subjective indicators show that it is the residents of old multifamily buildings who are most likely to suffer from energy poverty" (Sokolowski et al., 2019).

In the analytical context, the efforts of researchers at the Institute for Structural Research (IBS) who, based on data from the Household Budget Survey, have proposed a unified poverty index comprising five of its components, taking into account both objective and subjective coefficients of energy deprivation, are also noteworthy. The objective dimension includes the Low Income High Costs (LIHC) indicator and the amount of electricity expenditure as a share of income. In turn, the subjective dimension includes three exponents: the inability to adequately heat the home, the incidence of dampness, and the difficulty in settling utility bills. Considering the multidimensional energy poverty indicator, in 2017, energy poor households accounted for 10% of households in Poland, and about half of them were also impoverished in terms of income. According to estimates, "households living in buildings built before 1946, households living in rural areas, and households that subsisted on pensions and unearned income sources were particularly vulnerable to energy poverty" (Sokolowski et al., 2019).  

Counteracting the phenomenon of energy poverty in the context of challenges to improve air quality

An effective solution to the problem of energy poverty should address each type of the foregoing causes of the phenomenon, which in turn requires an integrated package of instruments. Hence, the preparation of a complementary set of public policies should be the subject of an integrated work of representatives of relevant ministries responsible for the above-mentioned areas.

Eliminating technical causes of energy poverty

The elimination of technical causes of energy poverty consists in providing households with buildings with high energy efficiency parameters and equipping them with energy saving devices (white and brown goods, lighting, etc.). Currently, there are several instruments of public support in this area: The "Clean Air" programme dedicated to the inhabitants of single-family houses in small and medium-sized towns, the "Stop Smog" programme concerning single-family houses, which is operated by self-governing authorities, as well as the Thermomodernization and Renovation Programme, operating since the 1990s, addressed to a wide range of entities, inclusive of multi-family buildings.

However, previous experience points to the limitations of these programs. First of all, they should be supplemented with programs aimed at the most energy poor, who are unable to benefit from grants and loans. In this group, thermomodernization must be carried out fully by an external entity, entail covering the cost of investment and provide knowledge about efficient use of the new heating system. Such activities could be carried out by communes within the framework of communal resources or by non-governmental organizations, but the funds for that purpose should be provided from the central budget (similarly to the Clean Air and Stop Smog programs). The local governments should also make every effort to ensure that the current public housing stock meets new energy efficiency requirements and is connected to the district heating network. Buildings under construction in the TBS stock may in turn become incubators of energy efficiency innovations (use of new energy saving technologies, renewable energy sources, passive or even plus energy standard), so that the stock sets standards for commercial buildings. 

Eliminating the economic causes of energy poverty 

Currently in Poland only an energy allowance which is paid to so-called vulnerable consumers is in force. This is a group that meets the criteria for eligibility for a housing allowance. It is known from research (Owczarek, Miazga 2015) that this instrument reaches only 7% of the energy poor, which means that it is not addressed properly. Eligible persons can also benefit from a targeted allowance from the social assistance system, which can be spent on the purchase of firewood. Firstly, these instruments are insufficient to cover current energy expenses, and secondly, most of the energy poor have no access to them (failure to meet the criteria).

The system for addressing the economic causes of energy poverty should be designed from scratch. A solution should be considered to integrate the public resources available within the current instruments and to create an energy allowance that would reach a well-defined group of the energy poor. With such a solution, even twice as many benefits would go to those in need and would remedy the economic causes in a more effective way. It is also worthwhile to introduce a system of public subsidies on energy bills (electricity, gas, heating) for eligible persons, which would also be accompanied by a program of repayment of bills kept by energy companies. The local governments themselves can establish local support programs.

Economic causes tend to be experienced most severely, so their elimination should be immediate, as soon as they occur (the principle of satisfying the first need).

Eliminating causes related to attitudes

The attitudes of households towards efficient energy use should be fostered. Conservation strategies can significantly reduce energy costs while fully meeting energy needs. A major component of energy expenditures is heating, so building administrators and energy advisors should first of all educate the inhabitants about efficient heating and the possibilities of upgrading heating systems. Attitudes should be shaped using the full spectrum of activities, which should be tailored to the needs and type of recipients (see details in the table below).

Overview of current and recommended instruments to support the energy poor in Poland

Source: Own study
*Programmes marked in italics are recommended programmes, other instruments are operating in the current legal syste

The review of public policies targeted at the energy poor is based on an expert report prepared by Dominik Owczarek of the Institute of Public Affairs at the request of the Ministry of Entrepreneurship and Technology in 2019.   

Authors: 
Rafał Boguszewski, SGGW
Tomasz Herudziński, SGGW
Dominik Owczarek, ISP

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