The Context

Close to fifty percent of all homes in Northern Ireland (44%) are subject to “fuel poverty” because the people cannot afford to keep their home adequately warm at reasonable cost.  A third of elderly people in the UK say they have to choose between eating and heating.  Such lack of a basic need is an indictment of the political society in which it exists.

Falling income, rising energy prices, and lack of energy efficiency in homes all contribute to fuel poverty throughout the UK.  Yet in NI disposable income increased between 1968 and 2008, even higher than other parts of the UK, largely because of state support within NI.  Energy efficiency gains in NI were significant, in large part because of the Warm Homes program and the fact that the NI Housing Executive replaced solid fuel fires with central heating in more than 90,000 homes.   So the rise in fuel poverty in NI is predominately a result of rising energy prices.

The fact that 99% of home heating in NI depends on imported oil contributes to this fuel poverty.  In 2002 NI was spending 40% more on fuel than England; by 2008 it was 60%.  This disparity is hardly surprising when it is noted that 80% of homes in NI use oil-burning central heating compared to 4% in England and 8% in Scotland, while only 11% of NI homes use gas-fired central heating, largely in the Belfast and Derry areas.

The Report

In September 2011 a study to analyse the definition of fuel poverty in Northern Ireland, commissioned by the Department of Social Development Northern Ireland, was published by researchers at the University of Ulster, entitled Defining Fuel Poverty in Northern Ireland: A preliminary review.  This study is part of a larger 3-part effort across the United Kingdom to assess fuel poverty. The report is also an extension of the UK Fuel Poverty Strategy (2001), the Ending Fuel Poverty: A Strategy for NI (2004), and Warmer Healthier Homes: A New Fuel Poverty Strategy for NI (2011).

The Fuel Poverty Strategy (2001) aims to ensure that fuel poor people are able to use more, rather than less heat should they need it, albeit in a more energy efficient home.  The Strategy defined a fuel poor household as “… one that cannot afford to keep adequately warm at reasonable cost…one which needs to spend more than 10% of its income on all fuel use and to heat its home to an adequate standard of warmth. This is generally defined as 21°C in the living room and 18°C in the other occupied rooms – the temperatures recommended by the World Health Organisation” (DEFRA 2001).

Using the UK definition, the percentage of fuel poor households increased in NI from 27% of households in 2001 to 44% in 2009.  In England the increase went from 7% in 2001 to 18% in 2009, and in Scotland it went from 13% in 2003 to 33% in 2009.   We have not seen the last of such increases in fuel poor households as the cost of fossil fuels will likely continue to rise, as evidenced by recent significant increases in energy prices on the island of Ireland, and as those costs will be subject to volatile price swings as fossil fuel gets scarcer and harder to extract. As we will note at the end, the issue of fuel poverty presents particular challenges for anyone advocating putting a higher price on carbon, including fossil fuels, in order to combat global climate change.

The report engages in a useful parsing of the terms of the definition and how the way we define fuel poverty determines the policies implemented to alleviate that poverty.

What is an adequate warmth?

A central factor in defining, and addressing, fuel poverty is what constitutes adequate warmth.  While some countries rely on subjective criteria to set such a standard, the UK has relied on objective temperatures.  If a policy is set to insure people can keep their homes warmed to a temperature of 18°C (64.4°F), then those who cannot afford such heat will fall within the category of fuel poverty.  If the temperature is set at 19°C (66.2°F) then more people likely would be categorized as fuel poor.  Conversely, if the temperature is set at 17°C (62.6°F) the level of fuel poverty drops.

Research has shown that a 1°C reduction in temperature can reduce UK energy bills by 10% for homes heated by gas or electricity, and also reduce the prevalence of fuel poverty. The report notes that of course energy efficiencies can lead to lower costs and savings, or the household can use the lower costs to crank up the heat, eliminating any savings of money or carbon. But the latter choice is not supported by research and indeed it has been shown that older people simply turn off heat during cold spells to save on costs.

Reviewing practices in England and Scotland, and based on WHO recommendations, the report recommends that the standard for indoor temperatures for NI should remain within the range of 18°C (64.4°F) to 24°C (75.2°F).  For vulnerable and elderly people their homes should have a temperature of 23°C (73.4°F) for living rooms, 20°C (68°F) for all other occupied rooms, and 18°C (64.4°F) for unoccupied rooms (to prevent damp and mould).

Why ‘Needs to Spend’ as Criteria

Calculating the cost of heating a property, undertaken by the Building Research Establishment (BRE), derives from various factors, including: property size, solar gain, insulation and heating systems, fuel prices, and climate.  The calculations produce an estimate of what people should, or need to, spend from their income for adequate heating and lighting.  It measures the “needs to spend” rather than what people actually spend on heating. Under an actual spend analysis, also referred to as “expenditure fuel poverty,” only 24% of people in NI spend more than 10% of their income, in contrast to 44% who should spend more that 10% to warm their house.  It would be cavalier to suggest that if people do not spend what is necessary to warm their houses, that is their choice.  The bitter, cold reality is that it is the most vulnerable who spend less than what is necessary for adequate heating because they do not have the money or need it for other necessities, like food and medicine.  So the weakness of the ‘actual spend’ analysis is that it ignores those who cannot afford to heat their homes.

In contrast, the ‘needs to spend’ analysis is more inclusive and accurate, since it defines the energy need for a household and estimates the fuel expenditure required to deliver that need.  The authors acknowledge that the BRE calculations on which it is based are infrequent and the data is hard to gather, and that other European countries are relying more and more on the easier to apply ‘actual spends’ or expenditure fuel poverty calculations.  To accommodate both approaches, the authors suggest several ways in which the ‘needs to spend’ calculations can be obtained more readily and frequently and they suggest that further studies along these lines are warranted.  One important addition to the BRE calculations can be provided by the SMART meters that are to be installed in NI homes over the next decade and that will provide timely and detailed data on energy use and costs.  For an assessment of how people are actually using smart meters, see “Smart Meters and Meter Readers,” in the Reports section of irish environment.

The 10% Cut Off

The cut off or threshold of 10% means that people have to be in a position to need to spend less than 10% of their income on fuel for all household uses (fuel, light, power) to escape from fuel poverty. (Note 1).  That figure of 10% of income is based on the UK Family Expenditure Survey and it includes all those who spend more than twice the median on fuel.

In perhaps their most significant position in the report, the authors argue that the 10% threshold is inaccurate when applied in NI since the actual figure for twice the median in NI would be 18% (people spend more than 18% of income on fuel), and many NI households are closer to the 18% than to the 10%. To move households from 18% to below 10% is an “overwhelming challenge” whereas many might be aided to move from spending 18% to spending 11-13%, through energy efficiencies or income support programs.  That would be a significant improvement in the lives of these households even though the improvement would not be deemed a success in eliminating “fuel poverty,” defined as needing to spend less than 10% of their income.  The recommendation from the report is that local authorities use the NI twice median figure, or 18% of income on fuel, for purposes of targeting the most severe fuel poor, and maintain the 10% of income for purposes of a general definition and for comparison across the UK.

Other Issues

The report also reviews the developments in the ways income is measured, what deductions are accounted for, and the impacts from winter fuel allowances and cold weather payments.

Implications

Any review of what constitutes fuel poverty needs to be watched carefully, as the authors of the report acknowledge, to insure that a review does not mask or serve as a rationale for weakening the criteria or justifying cut-backs in the funding in light of a lack of success in meeting the definition.

An appreciation of the stresses of a family struggling to find the resources to pay for heating their home in the winter time might well sensitize us to those living in developing countries and struggling to meet the burdens placed on them from escalating global climate change — lack of water and fuel, inundation of their villages from rising seas, and other environmental assaults.

On the other hand, there is the irony, and danger, that the existence of fuel poverty can undermine efforts to raise the cost of fossil fuel consumption as a means of reducing GHG emissions, and global climate change.  The higher price on carbon-based fuel is necessary to reduce dependence on it and turn utilities, governments and people to alternative, renewable sources of energy and reduce greenhouse gas (GHG) emissions.  Obviously, energy efficiency is one way to reduce fuel poverty and reduce GHG emissions.

Another complicating issue has to do with the relationship between fuel poverty and energy efficiency.  NI has a fairly robust energy efficiency scheme, and that will take a large leap forward if and when the Green New Deal is fully funded and implemented by the NI administration.  The catch is the danger of a so-called rebound effect where as energy efficiency increases, and as a result people can save money on energy costs, people are sometimes inclined to use more energy, at the same old cost, rather than save money.  This rebound can happen when car fuel efficiency measures are adopted, and people drive more for the same old cost.  Some might suggest the chance of the same effect with energy efficiencies in the home.  Yet the experience is that rebound does not have a significant impact and energy efficiency measures save money, reduce the need for more power plants, and reduce GHG emissions.  See the article by David Goldstein and Ralph Cavanagh, “Energy Efficiency and the ‘Rebound Effect’” in the Articles section of the current issue of irish environment.

 
Notes

(1) While a measure that was limited to expenditures on just heating would likely be more appropriate for defining fuel poverty, there are too many difficulties in separating household expenditures on heating, e.g., for electricity for heaters or oil systems or immersion heaters, from expenditures on other forms of energy, e.g. electricity for powering electronic products.

Sources

Liddell, C, Morris, C, McKenzie, Paul and Rae, Gordon (2011), Defining Fuel Poverty in Northern Ireland: A preliminary review.  For the NI Department of Social Development. eprints.ulster.ac.uk/19994/

Maya Robert, “6.3 million households are in fuel poverty,”  usswitch (06 July 2011)  www.uswitch.com/news/utilities/63-million-households-are-in-fuel-poverty-900000269/

Claire McNeilly, “A third of elderly ‘must choose between eating and heating’,”  Belfast Telegraph (19 Sept 2011). www.belfasttelegraph.co.uk/news/local-national/northern-ireland/a-third-of-elderly-must-choose-between-eating-and-heating-16051734.html

UK Fuel Poverty Strategy (2001),

www.decc.gov.uk/publications/basket.aspx?filepath=what+we+do%2fsupporting+consumers%2faddressing+fuel+poverty%2fstrategy%2ffile16495.pdf&filetype=4#basket

Warmer Healthier Homes: A New Fuel Poverty Strategy for Northern Ireland, NI Department for Social Development  www.dsdni.gov.uk/warmer-healthier-homes.pdf

Ending Fuel Poverty: A Strategy for Northern Ireland, NI Department for Social Development www.dsdni.gov.uk/ending_fuel_poverty_-_a_strategy_for_ni.pdf

David Goldstein, “Some Dilemma: Efficient Appliances Use Less Energy, Produce the Same Level of Service with Less Pollution and Provide Consumers with Greater Savings. What’s Not to Like?” Natural Resources Defense Council (NRDC).

switchboard.nrdc.org/blogs/dgoldstein/some_dilemma_efficient_applian_1.html