Energy Affordability in the EU: The Risks of Metric Driven Policies

This paper provides a pan-EU mapping of energy affordability using energy expenditure shares for the first time. Large variations in energy expenditure shares across the EU are identified, with the shares being significantly higher in New Member States than the EU15. These variations indicate that a pan-EU fuel poverty metric is inappropriate. Secondly, household-level data from the UK, France and the Republic of Ireland are used to simulate the impact of policy interventions on the recorded rate of fuel poverty. These simulations highlight that emphasising high-level fuel poverty metrics may distort policymakers’ decisions towards manipulating the ‘picture’ of fuel poverty rather than maximising welfare improvements; policymakers may assist households lying closest to fuel poverty thresholds rather than those most in need. Robust impact assessments identifying the fuel poverty interventions which deliver the greatest welfare increases for a given cost offer a better means of policy evaluation.