Energy Poverty and a Just Transition

Posted on Friday, 21 May 2021
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According to the Commission for Regulation of Utilities (CRU), as of February 2021, 240,006 households were in arrears on their electricity account and 112,833 on their gas, owing in total over €90 million. The blanket ban on disconnections, enacted as a measure to assist those households experiencing  financial difficulties as a result of the Covid-19 restrictions, is due to be lifted on June 1st 2021 and will be cause for concern for these households.  

Like so many other facets of Irish life, the Covid-19 pandemic has both exacerbated and highlighted issues that many households struggled with prior to March 2020. People who attend organisations like MABS and St. Vincent de Paul describe the stress of opening utility bills, or of a different type of stress, of not opening them knowing they’re going to pile up. 

Energy Poverty  

A report by the St. Vincent de Paul states that electricity and gas prices have increased by over 29% since 2010, when the Public Service Obligation (PSO) levy, standing charges and VAT are included, the uncontrollable related costs of the average electricity bill in an urban area account for 37%, increasing to 39% for rural areas.[1] Even with policies directly aimed at alleviating energy poverty, particularly for low income households, it’s an issue that persists. The Fuel Allowance, available 28 weeks of the year for certain social welfare-dependent households, as of Jan 2021 equates to €784 in total and is not sufficient to meet energy costs at these rates. Based on the SEAI indicative annual spend on fuel per BER, this is about enough to cover a 2-bed apartment, with an energy rating of B2 or better. Less energy efficient households, those with a rating of F or G, have a much higher indicative cost. In fact, a 2-bed apartment with an F or G rating has an indicative annual cost of €2,400 to €3,000 – almost 3 to 4 times the fuel allowance.  As the house increases in size, so too does the heating cost. A 3-bed semi-D with a low energy efficiency rating indicatively costs between €3,200 and €4,000 to heat. 

A higher proportion of homes with the lowest energy ratings use Coal, Smokeless Fuel, Peat, Wood and Solid Multi-fuels. These are high emitters of greenhouse gases and are having a serious effect on the air quality.  According to last year’s SEAI Energy in Ireland report, CO2 emissions from the combustion of fossil fuels accounted for 57% of Ireland’s total greenhouse gas (GHG) emissions.[2] 

Energy Efficiency  

We can address both the financial and environmental costs by making our homes more energy efficient. Energy efficient homes help reduce our carbon footprint as they require less fuel to heat. Despite Government strategies specifically aimed at tackling energy poverty, barriers persist to accessing grants for low income households. These are the households who are most likely to use solid fuels such as coal and peat; the very households that policy should be targeting.  The upfront costs associated with accessing sustainable energy grants can act as a barrier for those on low incomes. Too often subsidies are only taken up by those who can afford to make the necessary investments. Retrofitting is a prime example. As those who need them most often cannot avail of them due to cost, these subsidies are functioning as wealth transfers to those households on higher incomes while the costs (for example carbon taxes) are regressively socialised among all users. 

With over 230,000 homes having the lowest BER ratings of F and G, it is imperative that Government support these households by redesigning these schemes to make them more accessible. 

Investment in renewable energy and retrofitting on the scale required to meet our national climate ambition requires large scale investment in infrastructure. An upgrade of the national grid must be a key element of infrastructure investment so that communities, cooperatives, farms and individuals can produce renewable energy and sell what they do not use back into the national grid thus becoming self-sustaining and contributing to our national targets. 

Significant investment is required to ensure that our society meets our climate targets and that the transition is done in a just fashion. Focus must be on the long-term value and return that will be derived from this investment. Ireland has significant work to do in this area and is consistently one of the poorest performers in the EU when it comes to meeting emissions targets. 

Just Transition 

Incentives and tax structure must look at short and long term costs of different population segments and eliminating energy poverty and protecting people from energy poverty should be a key pillar of any Just Transition platform, A state led retrofitting scheme is required to ensure that people living in social housing and poor quality housing have access. This would increase energy efficiency, reduce bills, improve health outcomes, and assist us in meeting our climate-related targets. 

Research by the ESRI has shown that an increase in the carbon tax, as it is currently designed, would hit low income households harder. Therefore, unless there is greater investment in income support, public transport and energy efficiency schemes, low income households will have to absorb these costs as they are unable to afford the switch to climate friendly alternatives. To do this, we need to include all partners in the discussion. 

Sustainable local development should be a key policy issue on the local government agenda, and the Public Participation Networks are a forum where sustainable development issues at a local level can become part of local policy making. Indeed there is a requirement for local authorities to integrate sustainable development principles in the Local Economic and Community Plan and for such plans to contain a statement which may include objectives for the sustainable development of the area concerned. Sustainable Development Councils (SDCs) are a model for multi-stakeholder bodies comprising members of all major groups – public, private, community, civil society and academic – engaged in evidence-based discussion. The EU-wide experience has been that SDCs are crucial to maintaining a medium and long-term vision for a sustainable future whilst concurrently working to ensure that sustainable development policies are embedded into socio-economic strategies and budgetary processes. 

At a national level, the Citizen’s Assembly when considering ‘How the State can Make Ireland a Leader in Tackling Climate Change’ made a series of recommendations on tackling climate change and proposed some innovative solutions for addressing emissions from the Agriculture, Energy and Transport sectors. Social Justice Ireland supports the recommendations of the Citizens Assembly which is an example of positive stakeholder engagement and involvement in addressing a major public policy challenge. 

In order to develop a sustainable society, services and infrastructure must be well-planned and capable of adapting to the changing needs of the population over time.  This means that policy planning and design should, from the very beginning, include potential future changes, and as far as possible should be designed with these in mind.  

A robust social dialogue process provides a structure where current and future challenges can be addressed in a positive manner, acknowledging the task ahead, where reasoned, and evidence-based debate forms the basis for decision making and where all stakeholders are included in the decision-making process.  This dialogue should be built into any Just Transition framework with the appropriate mechanisms, supports and investment at all levels.