Energy efficiency of buildings should help to structurally reduce fuel poverty

Climate change and energy security are among the biggest challenges of our times. Besides posing several threats in terms of environmental, geopolitical and economic impacts, requiring a coordinated, rapid and effective response at European and international level, these challenges give us the opportunity to tackle specific societal problems from a new perspective.

This is notably the case of “fuel poverty”, also known as “energy poverty”.

Energy poverty is a multi-dimensional phenomenon, representing a particular form of poverty linked to the impossibility especially for the most vulnerable consumers  to pay their energy bills and meet their basic energy needs, including the ability to warmth or cool their homes properly and maintain an acceptable level of indoor air quality.

The range of effects deriving from energy poverty is extremely wide, with severe consequences on people’s physical and psychological well-being, having an indirect impact on array of different policy areas  from health, to environment and productivity.

With the number of people at risk of poverty and social exclusion in the European Union estimated around 23.7 % in 2015, and the correlation between poverty rates and fuel poverty-related aspects widely recognized, the topic has become more and more central on the European agenda.

Indeed, despite the lack of a common European definition of the problem, which varies significantly among Member States and the different geographical areas, awareness about the issue and the urgency to address it properly have been constantly growing.

In this sense, the European Commission has recently launched the EU Energy Poverty Observatory, established as a platform to support Member States in their fight against fuel poverty through the provision of comparable data, measuring and monitoring tools, as well as the share of knowledge and best practices.

Besides offering, for the first time, a comprehensive overview of the situation relating to the problem, the Observatory aims at facilitating public and private engagement as well as informed decision-making by the relevant national, local and EU authorities.

At the EU-legislative level, several pieces of legislation, currently under revision with the “Clean Energy for All Europeans” Package, address the issue. Starting from the Energy Union Governance Regulation, that should include provisions according to which Member States will have to monitor and report on energy poverty and the progress made in this area within their national energy and climate plans, to the Energy Performance of Buildings’ Directive (EPBD), the first legislative file finalized under the Package.

The new EPBD text, approved by the European Parliament Plenary in mid-April, specifically mentions energy poverty when referring to Long Term Renovation Strategies, establishing the obligation for Member States to develop policies and actions to alleviate this phenomenon, with a focus on the worst performing segments of the national building stock.

Cost-effective renovations of buildings and the overall improvement of their energy performances are surely key in this respect.

A study published by the Buildings Performance Institute Europe already in 2014 identified energy efficiency retrofits as the most sustainable solution to fuel poverty, providing for long-term and multiple benefits, especially when compared with possible alternative options, such as energy subsidies or direct financial support for household heating.

Among the advantages offered by energy efficiency improvements, we can certainly mention CO2 emission reduction, the cost-effectiveness and economic sustainability of measures, the push for innovation and the creation of new and more sustainable jobs.

Energy efficiency can be delivered in many different ways, according to the specific needs and circumstances. This represents a critical aspect when dealing with energy poverty, as energy-efficiency improvements allow, indeed, to tackle the phenomenon through several alternatives and complementary options.

These spans from low-cost measures, focusing on behavioral change, to others actions targeting social housing or multi- residential buildings, either through energy saving measures for new dwellings or cost- effective renovations of existing buildings, to be implemented, for instance, through energy performance contracts.

Besides guaranteeing a determined level of energy savings, the latter can provide, indeed, a viable solution to the always-compelling financing issue.

Nevertheless, direct support for energy efficiency upgrades from financial institutions, along with the creation and promotion of ad-hoc financial products, such as green bonds, is pivotal.

Recently, the ECON Committee of the European Parliament in its own-initiative Report on sustainable finance, building on the HLEG final report of January 2018 and the Commission’s Action Plan on “Financing Sustainable Growth”, highlighted this.

In this sense, the Report mentions innovative financial products as for instance, “green mortgages”, encouraging new householders to invest in the energy efficiency of their home with a long term saving perspective.

Finally, the active engagement of consumers through proper information is certainly crucial.

In order to be able to save energy and money on their energy bills, consumers need indeed to track their actual energy consumption and to assess the performances, for instance, of their home appliances.

For this reason, the use of smart meters, transparent bills, effective building automation and monitoring systems, as well as clearer energy efficiency labels enabling consumers to make informed choices when evaluating the products they wish to buy, are key elements to move towards a more efficient and just access to energy for European citizens.