Parliament drafts energy poverty definition as part of EU social climate fund overhaul

Esther de Lange, a Dutch Member of the European Parliament, is one of the two co-rapporteurs on the EU's proposed social climate fund. [European Union 2019 - Source: EP]

The two lawmakers in charge of drafting the European Parliament’s position on the EU’s new social climate fund have gone a step further than the European Commission’s initial proposal by drafting a definition of both energy and transport poverty.

The social climate fund was put forward by the EU executive last year as part of a package of legislation aimed at cutting the EU’s greenhouse gas emissions 55% below 1990 levels by 2030.

The fund is intended as a protection mechanism for low-income households against an expected rise in fuel prices caused by the introduction of a new EU carbon market for buildings and road transport.

It is hard to tell how many people are affected by energy poverty in Europe. According to Eurostat, around 31 million Europeans lived in energy poverty last year but the EU executive’s own research body put the number at 50 million people in 2019.

The problem is that there is currently no EU-wide definition of energy poverty.

In their amendments to the European Commission’s proposal, conservative lawmakers Esther de Lange and David Casa set out to change that, laying out definitions of both energy and transport poverty.

“We introduce – for the first time! – a European definition of energy poverty and transport poverty,” de Lange said on Twitter.

“Definitions alone are of little use, so the member states must also make mandatory monitoring of these forms of poverty, in order to be able to share ‘best practices’ with each other,” the Dutch MEP added.

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Definitions of energy and transport poverty

The two MEPs have defined energy poverty as “households in the lowest income deciles whose energy costs exceed twice the median ratio between energy costs and disposable income after deduction of housing costs”.

Meanwhile, transport poverty is defined as “households that have a high share of mobility expenditure to disposable income or a limited availability of affordable public or alternative modes of transport required to meet essential socio-economic needs,” particularly in remote and rural areas.

This is “caused by one or a combination of factors: high fuel expenditures, the phase-out of internal combustion engine cars, high costs for the replacement of internal combustion engine cars with zero-emission cars, high costs or lack of availability of adequate, affordable public or alternative modes of transport”.

“It is quite ambitious, there is currently no definition of transport poverty and some member states still do not have any definition of energy poverty,” said Ondřej Knotek, a Czech lawmaker in charge of drafting the Parliament’s position on the social climate fund.

“So I am expecting lots of questions and debates with other political groups on these two new proposals,” said the Czech MEP, who is from the centrist Renew Europe political group.

However, he warned against putting too much burden on EU countries when it comes to proposed targets to reduce the exposure of vulnerable households to rising fuel costs.

“The proposal of the Commission already asks lots of information [of] the Member States. I am concerned that the inclusion of new targets and objectives might create additional administrative burden for the member states and delay the access to the Fund for the beneficiaries,” Knotek told EURACTIV.

More focus on rural poverty

Plans to extend the EU’s carbon market to road transport and buildings were met with scepticism in France, where violent protests erupted in 2018 when the government introduced a carbon tax on petroleum products that led to a €0.10 rise in fuel prices.

The EU’s proposed carbon market for transport and heating fuels would be “politically suicidal” and risk triggering social unrest similar to the ‘Yellow Vests’ movement in France, warned French MEP Pascal Canfin last year.

Planned EU carbon market reform is 'politically suicidal', warns French MEP

Plans to extend the EU’s carbon market to transport and buildings would be “politically suicidal” and risk triggering social unrest similar to the 2018 Yellow Vests movement in France, warned French MEP Pascal Canfin last week. EURACTIV France reports.

In France, the ‘Yellow Vest’ protesters were mostly located in rural areas with poor transport connections. In those places, owning a car is not a luxury, it’s a necessity.

The proposed amendments to the social climate fund takes this reality into account by putting more focus on rural areas.

Rising fuel prices could “disproportionately affect” certain vulnerable groups “including in rural, insular, mountainous, remote and less accessible areas or for less developed regions or territories, including less developed peri-urban areas,” says the draft report.

“It’s important that we are really starting to contextualise the diversity of energy poverty. I think, particularly in northwest Europe, we often associate energy poverty with urban, bad quality, inefficient or damp apartments,” said Friends of the Earth campaigner, Martha Myers.

“However, it’s clear that in Central and Eastern Europe as well as in other areas, energy poor households are often rural of low-income homeowners. So they have a completely different set of needs and priorities,” she added.

The two lawmakers have also proposed that vulnerable small and medium enterprises (SMEs)  should be eligible for the fund. This would include businesses that are significantly affected by the new carbon price and “lack the means to renovate the building they occupy or to upgrade road vehicles on which they rely in the course of business”.

However, for EU countries wanting to get their hands on the money, the lawmakers have proposed safeguards to ensure they are in line with rule of law, something Poland and Hungary may struggle with.

“There will be a black-and-white link with the rule of law. Money should not go to governments that do not adhere to very normal norms and values such as freedom of the media and independent justice,” de Lange wrote on Twitter.

Still not enough money

Petros Kokkalis, a leftist lawmaker who will form part of the Parliament’s negotiating team on the social climate fund, welcomed the inclusion of rule-of-law safeguards and the prioritisation of green investments for vulnerable households.

However, he told EURACTIV that the EU fund “should also exclude the funding of fossil fuels and promote the public modes of transport”.

Meanwhile, there is still concern that the social climate fund does not have enough money for the number of jobs it has to fulfil.

“It looks like it will continue to be no more than a drop in the ocean for those in energy poverty,” Myers said. “We do need a commitment to much more substantial and sustained funding avenues” beyond the proposed carbon price for road transport and buildings, she said.

There are ideas from other groups in Parliament to find funds from other sources. Kokkalis told EURACTIV that the social climate fund “should be further enhanced by revenues” from the original emissions trading scheme.

The next step will come in February when the two lawmakers will present their draft reports to the Parliament’s environment and employment committees.

> Read the draft social climate fund amendments and the explanatory memorandum.

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[Edited by Frédéric Simon]

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