Energy Poverty and Climate Policies

By Jack Dini —— Bio and Archives July 21, 2021

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Energy poverty is not being able to afford adequate warmth, cooling, lighting, or the energy to power appliances that guarantee a decent standard of living and health. One shorthand rule is that a household is energy poor if it must spend more than 10 percent of its income on power. As renewable energy mandates are rising 'ecological' taxes have driven up electricity prices, and increases in energy poverty have become a problem in countries such as Germany and the United Kingdom. It is estimated that 50 million European households now qualify. ¹

Germany is considered by some to be the best success story in the world of effective solar and wind use, and you'll often hear that they get a large percentage of their energy from solar and wind. Germany embraced solar and wind and ended up in energy poverty. In Germany, electricity prices have more than doubled since 2000 when solar and wind started receiving massive subsidies and favorable regulations and their electricity prices are three to four times what one would pay in the US. (Because of its low reliability solar and wind energy options require an alternative backup—one that's cheap, plentiful and reliable—to make it work, thus creating a more expensive and inefficient process.) ² A 2017 study found that the proportion of households in Germany spending more than 10 percent of their income on energy tripled from 7.5 percent in 1986 to 22 percent in 2013. Every year 600,000 households (2 million people) are getting their power switched off in Germany because they can't afford the skyrocketing electric bills.³ This finding is consistent with other studies of the effects of climate policies on poverty, including a research project undertaken for the IPCC. ⁴ According to a 2018 report, there are currently 1 billion people in the world, 13% of the total population, with no access to electricity, mostly in Africa and South Asia. In sub-Saharan Africa, it is estimated that approximately 600 million people—57% of the population—live without electricity, against the 350 million people—representing 9% of the population—who lack access in developing Asia. If we compare data to the early 2000s, there has been a relevant improvement: regions such as East Asia and Latin America have have now reached a better energy access thanks to the extension of electricity networks. Despite the progress, the environmentally sound aspect is still far from being applicable for most of them: it is estimated that nearly 2.7 billion people—40% of the world population—lack access to clean cooking facilities worldwide, relying instead on solid biomass, coals or kerosene as their primary cooking fuel, that we all know for being the most pollution energy sources available. ⁵

Stark disparities exist in US energy burdens, the percentage of household income spent on energy bills. Urban and rural low-income households spend roughly three times as much of their income on energy costs as compared to non low-income households (7.2% and 9% versus 2.3% and 3.1%, respectively). Moreover, low-income African American, Latin, multifamily and renter households are disproportionately impacted by high energy burdens. Out of a total of 118.2 million US households in 2015, the US Energy Information Administration (EIA) estimated that 17 million households received an energy disconnect/delivery stop notice and 25 million households had to forgo food and medicine to pay energy bills. ⁶ Unlike the UK nations, the United States lacks federal energy poverty recognition and strategy that encompasses definitions, reduction targets/objectives and periodic evaluation. ⁶ Because access to reliable and affordable energy is essential in the struggle against poverty, UN Secretary-Genral Ban Ki-moon is calling on governments, businesses and civil society to achieve universal access to modern energy services by 2030 through their Sustainable Energy For All Program. ⁷ Regarding the Paris agreement, one study suggests that the massive cost of reducing emissions will lead to an increase in poverty of around 4%, so if things are bad now, they will get even worse. ⁸

References

1. Ronald Bailey, “Renewable energy mandates are making poor people poorer,” Reason, June 2016
2. Alex Epstein, “Energy poverty kills,” cornwallalliance.org, June 25,2021
3. Stephen Moore, “Europe's lesson teaches us: don't go green,” townhall.com, May 14, 2017
4. Keywan Riahi et al., “The shared socioeconomic pathways and their energy, land use, and greenhouse gas emissions implications: An overview,” Global Environment Change, 42, 153, January 2017
5. “Energy poverty: effects on development, society, and environment,” habitat.org, July 19, 2021
6. Dominic J. Bednar and Tony G. Reames, “Recognition of and response to energy poverty in the United States,” Nature Energy, March 23, 2020
7. “What is energy poverty?”, enbridge.com, July 17, 2021
8. Lorenza Campagnolo and Marinella Davide, “Can the Paris deal boost SDGs achievement? An assessment of climate mitigation co-benefits or side-effects on poverty and inequality,” World Development, 122, 96, October 2019