Energy poverty Jan Osička Lecture outline • Energy, development, inequality • Energy poverty in energy-unintensive countries • Energy poverty in energy-intensive countries Energy poverty and fuel poverty: the meaning • Energy poverty = lack of (physical) access to modern energy services • Fuel poverty = inability to adequately heat (or provide necessary energy services in) one‘s home at affordable cost • Often in literature however: energy poverty = fuel poverty • No agreement on how to measure energy/fuel poverty => What policies shall be drafted to address the issue? Energy poverty in energy-unintensive countries/regions Energy poverty in energy-unintensive countries/regions Reliance on biomass • Indoor air pollution • Time and effort in collecting biomass • Unsustainable harvesting practices Premature annual deaths from household air pollution and other diseases 100% reliance on wood Energy poverty in energy-unintensive countries/regions Energy poverty alleviation pathway: breaking the missing return on investment problem • Scattered and small demand for energy • Low purchasing power => Centralized solutions do not work => Micro-solutions need to be developed Energy poverty in energy-intensive countries • Recognized and reflected only recently (UK as a frontrunner – effects of market liberalization?) • EU gathers data and discusses appropriate policies (defining vulnerable consumers) (see for example https://ec.europa.eu/energy/sites/ener/files/documents/INSIGHT_E_Energy%20Poverty%20-%20Main%20Report_FINAL.pdf) • The issue of redistribution • The social sustainability – environmental sustainability nexus Equity and redistribution • Should energy be subsidized? • If yes, what and how? Subsidized energy prices • Alleviate (energy) poverty • Foster purchasing power and consumer demand • Burden state treasury • Encourage overconsumption • Challenge competitiveness of energy suppliers • Leak to unintended groups Natural gas wholesale market in Poland • Goal: to decrease natural gas price for the end customers • Tool: mixing cheap domestic production (30%) with expensive imports (70%) to reduce the wholesale price • Result: even more expensive imports Natural gas retail market in the Ukraine • Goal: affordable heat for households • Tool: regulated retail gas price (subsidies equaled to 5.6% of GDP) • Result: overconsumption which contributed to the political and national security crisis of 2014 Natural gas retail market in the Ukraine Natural gas retail market in the Ukraine The social sustainability – environmental sustainability nexus Should the following measures/technologies be subsidized? • Thermal efficiency of buildings • Large scale renewable energy production sites • Decentralized renewable energy sources • Electrical mobility The measurement issue: Energy Efficiency How would you measure energy efficiency? Energy Efficiency How would you measure energy efficiency? •Energy intensity: GDP/energy consumption •Energy consumption per capita Energy efficiency: the best of the best (USD2005 GDP PPP/kgoe) Energy efficiency: the worst of the worst (USD2005 GDP PPP/kgoe) Energy consumption: the lowest (kgoe per capita) Energy consumption: the highest (kgoe per capita)