EU climate action through an energy poverty lens

Area of Science:

• Environmental economics
• Climate policy analysis
• Energy justice

Background:

• Carbon pricing incentivizes low-carbon energy but may worsen energy poverty.
• EU climate neutrality transition presents social challenges, including energy poverty.
• A balanced policy mix is crucial for addressing climate change and energy poverty simultaneously.

Purpose of the Study:

• To review EU policies addressing energy poverty and social implications of climate transition.
• To assess the impact of EU climate policy proposals on energy poverty.
• To explore alternative policy designs for mitigating energy poverty.

Main Methods:

• Operationalised an affordability-based definition of energy poverty.
• Numerically illustrated the effects of EU climate policy proposals.
• Analyzed income-targeted revenue recycling schemes.

Main Results:

• Current EU climate policy proposals risk increasing energy poverty without complementary measures.
• Alternative policies with revenue recycling could alleviate energy poverty for over 1 million households.
• Income-targeted schemes are effective and require minimal information.

Conclusions:

• Tailored interventions are necessary to effectively combat energy poverty alongside climate policies.
• Insights from behavioral economics and energy justice can inform optimal policy design.
• A balanced instrument mix is essential for a just climate neutrality transition.