A Sustainable Solution to Energy Poverty

The market price for natural gas is currently rising at an unprecedented rate. On 1 October, several energy suppliers raised their consumer prices again. According to the price comparison site, Gaslicht.com, this will cost an average household, taking out a new contract, hundreds of extra euros per year. The heating of your home is becoming an increasingly larger cost item. In order to keep the energy bill affordable, it was decided to make 375 million available for lowering the energy tax.

At the same time, there is a Climate Agreement, in which the government has set out a long-term strategy for the pricing of energy. The price of natural gas is slowly being increased, while the price of electricity is set to decrease. Rising gas prices should motivate households to use less gas. They can do this, for example, by insulating their homes or switching to heating using a heat pump. The Netherlands wants to be rid of gas by 2050.

The government, therefore, wants to increase the price of gas for consumers through taxation. So why is a reduction being introduced now?

Actually, the market price of gas is rising too fast. The proposed reduction in the energy tax is aimed at keeping energy affordable and preventing payment problems. The term ‘energy poverty’ is already being bandied about frequently. The group most susceptible to this are households with a relatively low income and poorly insulated houses. They are more vulnerable to sharply rising energy costs, as these take up an increasing share of their income. TNO recently estimated that 550,000 households are affected by energy poverty.

However, a generic reduction in the energy tax will not help this vulnerable group. If we compare a well-insulated home to a home without proper insulation, the energy needs can be quite different. A household that has to take out a new energy contract now will pay about 140 percent more for gas than a year ago. For a well-insulated home, this would amount to an average of 170 euros in extra costs, but for a home without proper insulation, it would be as much as 750 euros. The proposed reduction in the energy tax would ensure that each household would be compensated by approximately 50 euros. So, these are drops in the ocean that do not end up where they are needed most because an above-average number of low-income households live in poorly insulated homes.

This is the perfect time for targeted measures for the group of households that is hit hardest. Not only are they now hard hit by the increase in gas prices, but also in the future they will be the most vulnerable to the government’s climate strategy. Households experiencing energy poverty often do not have the money to make their homes more sustainable. Compensation for the high gas prices is appropriate for these households, but let’s look in particular at the unique possibility to combine the reduction of short-term costs with the future sustainability goals: subsidise the sustainability of poorly insulated homes. This will kill two birds with one stone: households will have permanently lower energy bills and the demand for natural gas, which we so desperately want to get rid of, will decrease.

Of the 550,000 households affected by energy poverty, only 12 percent own their own homes. The remaining households are in rented accommodation, three-quarters of them owned by housing corporations. Let housing corporations use the resources released by the abolition of the landlord charge for home insulation.