National Strategy to Combat Energy Poverty: Study for ZERO presents Recommendations for an Effective Action Plan

Energy poverty, which currently affects between 35 and nearly 100 million people in the European Union, is a growing concern. In Portugal, the percentage of the population unable to keep their homes heated increased in 2022 compared to 2021, reaching 17.5%, significantly higher than the European average of 9.3%. This figure continues to rise, as per data from the National Statistics Institute (INE) in 2023, marking an increase of 3.3 percentage points from 2022. Additionally, Portugal surpasses the European average in indicators of housing deterioration. With deep historical roots in the country, energy poverty should take a prominent place on the national political agenda.

In this context, we analyzed the National Long-Term Strategy to Combat Energy Poverty 2023-2050 (ELPPE), identifying its challenges and presenting recommendations. This analysis, carried out within the framework of a European Climate Foundation project, highlights the need for more robust measures to combat energy poverty in Portugal. The study aims to ensure that the support and investment values present in the Strategy are well utilized. These values could reach 14 billion euros by 2040, including 3.1 billion euros from the Recovery and Resilience Plan by 2026 (2.7 billion for Housing and 420 million for building energy efficiency), an investment of 7.671 billion euros by 2040 through building stock renovation to reduce energy poverty as outlined in the Long-Term Strategy for Building Renovation (ELPRE), up to 1.2 billion euros from the Social Climate Fund (FSAC) available for the period 2026-2032, and 2.1 billion euros mainly associated with the social electricity tariff if this support mechanism is maintained until 2040.

The study praises the strategy as an important step towards addressing energy poverty in Portugal but argues that significant improvements are needed to achieve its objectives, having analyzed six main dimensions of the strategy:

Diagnosis of energy poverty in Portugal

Action strategies and proposed measures

Strategic goals and objectives

Monitoring processes

Funding sources

Governance model, involvement process, and stakeholder consultation

The analysis, based on existing scientific literature on energy poverty, identifies a series of opportunities for improvement in key areas.

Main considerations

The ELPPE is a central and crucial instrument for defining the vision and path to combat energy poverty, but the study concludes that Portugal needs to adopt a more comprehensive, transparent, and sustainable approach to address this issue. The main recommendations are:

Diagnosis of energy poverty in Portugal:

Definition of energy poverty: While based on the European definition, the definition of energy poverty needs to be more comprehensive and representative of energy services and the different ways energy poverty manifests in Portugal. It is crucial to qualify energy services not just in terms of levels, but also in terms of quality, safety, and sustainability, ensuring that access to energy does not compromise other basic needs. The definition should highlight the real impact of energy poverty on people's lives, relating it to its consequences. Besides identifying and analyzing contextual factors such as climate, geographic location, and socioeconomic conditions that influence energy poverty, it is essential to understand the direct and indirect causes.



Definition of vulnerable consumer: It is crucial to improve the definition of a vulnerable consumer, including omitted groups and analyzing the interaction between this concept and energy poverty.

Measurement and Monitoring:

A diverse set of indicators is proposed for a comprehensive approach to measuring energy poverty. However, there are potential improvements in the selection and organization of indicators, as choosing inadequate indicators or using them individually results in less accurate estimates. The choice of indicators not adjusted to the Portuguese context is also problematic. Furthermore, there is a lack of analysis of relevant aspects such as the adequacy of energy services, hidden energy poverty, energy supply, the regionality of the problem, and the forced choice between energy and other basic services. Expanding the vulnerability scale is favorable, allowing for a more robust and accurate analysis. Improvements can be made with already available data, but collecting new data would allow for a more complete and rigorous identification of households in energy poverty.

Strategies and proposed measures to combat the problem:

Regarding action lines, the strategy proposes an extensive framework of measures focusing on various relevant aspects, linking them to objectives, outcome indicators, and action instruments. However, the strategy lacks detailed quantitative analysis of the impact of each measure and a stronger connection to the main objectives of reducing energy poverty. Some measures are general and need more detail and targeting towards people in energy poverty. Safeguard mechanisms are recommended to ensure the right to housing after renovation actions, stronger links between energy efficiency and decarbonization, revision of the territorial scope of tax incentives, revision of eligibility criteria for social tariffs, and greater support for decarbonizing energy consumption for food preparation. It is necessary to involve local entities and align national objectives with local ones, leveraging community scientific knowledge and other relevant actors. Ensuring minimum energy services and access to private housing at reasonable prices are missing actions that would benefit the most vulnerable consumers.

Strategic Goals and Objectives:

A greater link between measures and goals is needed, including intermediate objectives and goals that clarify these interconnections. The objectives need more specification regarding the impact on the target population and their link to the main indicators. The strategy should be more transparent about the method of choosing goals and how they will be achieved by the proposed measures.

Monitoring Processes:

Monitoring the implemented measures should include ex-ante impact assessment to compare the success of each measure, requiring data collection and new surveys, as mentioned in the strategy, with procedures to involve people in energy poverty. Inspired by the work of Anderson (2015) and Peters (2018), Allers, C. (2022) highlights that policy design should follow several aspects, including the importance of evaluating the effects of measures against anticipated objectives.

Funding Sources:

The funding sources for implementing the measures also lack detail, considering the difference between current funds and those needed. A more significant role for fiscal policy is essential to balance wealth distribution in the energy sector and raise public funds, prioritize support for struggling consumers, involve the private sector in financing the energy transition, and abandon ineffective support mechanisms. Most funds should be directed towards renovating the passive envelope of buildings, which is the most structural and long-term impactful measure.

Governance Model, Involvement Process, and Stakeholder Consultation:

The creation of a national observatory is a positive point, but greater involvement of the advisory commission in different phases of the energy poverty mitigation process, from plan design to information collection and measure implementation, could result in greater on-the-ground impact and more effective support for people in energy poverty. This process should be based on collaborative and co-creation practices, involving people in energy poverty, to ensure democratic legitimacy and a sense of ownership over decisions made. The strategy succeeds in identifying its geographic scope and indicators to assess progress but fails in terms of transparency, not addressing the uncertainty and rigor of estimates and methods behind some decisions. Additionally, the principle of participation is not fully met, as stakeholder involvement is partial. The principle of Continuity and Capacity may be fulfilled if the plan outlined in the strategy is implemented in upcoming reviews and the Action Plan. Finally, public consultation should be fully respected in future reviews of the strategy and action plan.

This analysis can improve the approach and content of the strategy. ZERO believes that the recommendations of this study are essential to integrate into the Action Plan to Combat Energy Poverty 2023-2050, creating more effective instruments to address the different facets of this complex problem and guide the policy of mitigating and eradicating energy poverty.