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energy poverty

Energy credits should not have included richest households, climate NGO says

A new report by Friends of the Earth has made 49 recommendations to government about how to tackle energy poverty.

THE BUDGET’S ENERGY credits should have been targeted to those with a genuine need for support instead of allocating funds to high-income households that were not affected by cost of living increases, according to a climate NGO.

A new report by Friends of the Earth has assessed the strengths and weaknesses of current government policies and interviewed a range of experts working in energy and social justice to compile detailed recommendations on how to tackle energy poverty. 

While there has long been some level of energy poverty in Ireland – that is, being unable or under significant pressure to afford an adequate supply of electricity or heating – the combination of rising energy bills and wider inflation has meant a larger number of households have found it even more difficult to cover energy costs over the last year.

“Frontline services report that those affected by fuel poverty now comprised both people who have long been trapped in fuel poverty – but for whom the situation is now much worse – and new cohorts,” the Friends of the Earth report said.

It warned that there is a “real danger that things will worsen in 2023″ as the value of credits and social welfare decrease with inflation, with “resulting deterioration in health”.

The report outlined that social inclusion experts were concerned that “the energy credits in Budget 2023 were not targeted”, describing it as “a political decision whereby government spread help to the full range of its supporters, including more affluent households who could still afford higher energy costs”.

“In response to the energy price crisis, the government introduced two sets of electricity credits, valued at €400 in 2022 and €400 in 2023, which are automatically credited to household electricity bills,” the report said.

“This was a highly expensive (€1.6 billion), poorly targeted measure that added to inflation and incurs a significant opportunity cost. It is reasonable to say that at least the top third of households did not need this intervention to prevent them from experiencing energy poverty or deprivation.

“If a third of this expenditure (€533 million) was better targeted, it could have been much more efficient and effective. From a climate perspective, the opportunity was lost to allow higher energy prices to act as a shock treatment to push households with the capacity to engage more seriously in energy conservation.

“Instead, the message from government was that the state will step in to pay people’s bills when energy (including fossil fuels) becomes more expensive.

“The experience of an €800 subvention may give higher income households the false impression that the current energy crisis is overstated, whereas €800 will not be enough to allow lower income households to meet their energy needs in the two-year period 2022-23, especially those not eligible for Fuel Allowance.”

The report identified that the private rental sector is “particularly vulnerable” to energy poverty because many rentals are older dwellings with low BER standards.

Additionally, the sector suffers from “weak regulation and protections for tenants”, the report said, and weak incentives for retrofitting, with tenants in private rented or social housing typically not afforded any ability to influence the insulation level of their homes.

There are “serious problems” with retrofitting and energy efficiency programmes, according to the report.

These include waiting lists of up to three years for the SEAI’s free energy upgrade scheme and the shortage of necessary workers and skills to carry out the programmes efficiently.

Overall, it found government policy on energy poverty to lack scale and ambition, with a more significant focus on short-term fixes to crisis situations than on finding long-term solutions.

It said many policies are “overly market-focused” and “undermined by siloed Departments and public bodies” and that the government’s new energy poverty action plan does not offer clear quantitative targets for reducing energy poverty or deprivation. 

The report offers 49 recommendations to the government on reducing energy poverty, including improving access to grants and zero- or low-interest loans to finance retrofitting, increasing all social welfare payments to reflect the cost of living, introducing an Energy Poverty Act with legally-binding targets and transparent regulation of standing charges on energy bills.

It recommends reforming the role of the Commission of Regulation of Utilities and other public bodies and establishing a Just Transition Commission to create better public awareness about efforts to integrate social justice with climate action.

In a statement, FOE Energy Policy Officer Clare O’Connor said that “this research shows that if the government is serious about meeting their climate targets, they will need to change their current approach and do it in a way that protects and prioritises households that are most in-need first”.

“Families who can’t afford to pay their energy bills aren’t in a position to invest in expensive retrofitting measures. The report shows how the Government should be going much further to make sure these families have access to the benefits of warm homes and lower energy bills,” O’Connor said.

“Retrofitting for low-income families in inefficient housing needs to be a top priority – much more investment is needed in state-led retrofitting programmes so they can reach more families, specifically the SEAI Free Energy Upgrade scheme and the Local Authority Retrofit Scheme for social housing.”

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