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A Multidimensional Approach to Measuring Fuel Poverty

Dorothee Charlier and Berangere Legendre

Year: 2019
Volume: Volume 40
Number: Number 2
DOI: 10.5547/01956574.40.2.bleg
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Abstract:
In this study we suggest that a more careful and systematic understanding of fuel poverty can be developed through a multidimensional approach to the relationship between monetary poverty, residential energy efficiency, and heating restriction. Our objective is to provide new ways to better identify those who suffer the most from fuel poverty to optimize policy. Thus, the purpose of this paper is to measure poverty in three steps following Sen (1979): (i) combining poverty characteristics into an aggregate measure involving a fuel poverty index (FPI), (ii) identification and comparison of poor people according to existing and new definitions and (iii) testing the robustness of the fuel poverty composite indicator. Our results show that the usual measures reveal a gap that does not consider all the dimensions of fuel poverty, excluding those who are at or above a certain threshold, but who are nevertheless vulnerable.



From Residential Energy Demand to Fuel Poverty: Income-induced Non-linearities in the Reactions of Households to Energy Price Fluctuations

Dorothee Charlier and Sondes Kahouli

Year: 2019
Volume: Volume 40
Number: Number 2
DOI: 10.5547/01956574.40.2.dcha
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Abstract:
The residential energy demand is growing steadily and the trend is expected to continue in the near future. At the same time, under the impulse of economic crises and environmental and energy policies, many households have experienced reductions in real income and higher energy prices. In the residential sector, the number of fuel-poor households is thus expected to rise. A better understanding of the determinants of residential energy demand, in particular of the role of income and the sensitivity of households to changes in energy prices, is crucial in the context of recurrent debates on energy efficiency and fuel poverty. We propose a panel threshold regression (PTR) model to empirically test the sensitivity of French households to energy price fluctuations - as measured by the elasticity of residential heating energy prices - and to analyze the overlap between their income and fuel poverty profiles. The PTR model allows to test for the non-linear effect of income on the reactions of households to fluctuations in energy prices. Thus, it can identify specific regimes differing by their level of estimated price elasticities. Each regime represents an elasticity-homogeneous group of households. The number of these regimes is determined based on an endogenously PTR-fixed income threshold. Thereafter, we analyze the composition of the regimes (i.e. groups) to locate the dominant proportion of fuel-poor households and analyse their monetary poverty characteristics. Results show that, depending on the income level, we can identify two groups of households that react differently to residential energy price fluctuations and that fuel-poor households belong mostly to the group of households with the highest elasticity. By extension, results also show that income poverty does not necessarily mean fuel poverty. In terms of public policy, we suggest focusing on income heterogeneity by considering different groups of households separately when defining energy efficiency measures. We also suggest paying particular attention to targeting fuel-poor households by examining the overlap between fuel and income poverty.



Energy Consumption in the French Residential Sector: How Much do Individual Preferences Matter?

Salomé Bakaloglou and Dorothée Charlier

Year: 2019
Volume: Volume 40
Number: Number 3
DOI: 10.5547/01956574.40.3.sbak
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Abstract:
The aim of this research is to understand the impact of preference heterogeneity in explaining energy consumption in French homes. Using a discrete-continuous model and the conditional mixed-process estimator (CMP) enable us to address two potential endogeneities in residential energy consumption: energy prices and the choice of home energy characteristics. As a key contribution, we provide evidence that a preference for comfort over saving energy does have significant direct and indirect impacts on energy consumption (through the choice of dwelling), particularly for high-income households. Preferring comfort over economy or one additional degree of heating implies an average energy overconsumption of 10% and 7.8% respectively, up to 18% for high-income households. Our results strengthen the belief that household heterogeneity is an important factor in explaining energy consumption and could have meaningful implications for the design of public policy tools aimed at reducing energy consumption in the residential sector.



Residential CO2 Emissions in Europe and Carbon Taxation: A Country-Level Assessment

Dorothée Charlier, Mouez Fodha, and Djamel Kirat

Year: 2023
Volume: Volume 44
Number: Number 5
DOI: 10.5547/01956574.44.4.dcha
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Abstract:
This paper examines the determinants of residential CO2 emissions, which are not covered by the European Union Emissions Trading System (EU ETS), in 19 European countries between 2000-2017. Using both static and dynamic panel models, we found strong relationships between CO2 emissions per capita, GDP per capita, energy prices and heating needs. We then assessed the impact of European carbon taxation and show that a €20/tonne CO2 tax lowers emissions by 1% on average. We found that this tax affects countries differently in terms of tax revenue-to-GDP ratio. Poland and the Czech Republic would have to pay the highest contribution, and Portugal and Denmark the lowest. Finally, we propose a scenario that equalizes countries' tax burdens. We show that, were Europe to redistribute all tax revenues, the main beneficiaries would be Poland and Belgium, while Denmark and Luxembourg would have to pay a surtax.





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