Energy: Poverty, Crises & Justice

Author: Charlotte Akers

“Being affected by energy poverty can have severe implications. Families should not need to choose between food and paying their energy bills. The energy crisis we are experiencing today is a consequence of the failure to plan for, deliver and fund a secure and just transition to a decarbonized power sector.” - (C40 Cities)

A core tenet of a just transition is the transition to renewable energy sources (and the creation of green jobs and sustainable infrastructure that would come in tandem with this). Currently, a reliance on fossil fuels for energy across nations, industries and manufacturing is one of the core contributors to climate change, severely degrading our ecosystems, and having a deadly impact on human health and wellbeing. Yet governments and leaders across the world continue to subsidize, support, and maintain structural reliance on fossil fuels.

The extraction and burning of fossil fuels is incredibly damaging for the planet and people; but our structural reliance on this finite resource, and the fragility of its globalised supply chain, is also deeply entwined with matters of social justice.

Energy Poverty

Firstly, what is Energy Poverty?

Energy poverty refers to the lack of affordable, reliable, quality, safe and environmentally sound energy. (Habitat) In the UK, the first official definition of energy poverty came in 1991 which stated that "a household is said to be fuel poor if it needs to spend more than 10% of its income on fuel to maintain an adequate level of warmth". (EU Commission)

Energy poverty is a key challenge facing people living in all regions, and one which risks exacerbating poverty and inequality by limiting access of the most vulnerable to lighting, cooling and refrigeration, clean cooking and heating.

As is often the case in geopolitical, environmental, and social crises, the challenges faced are exacerbated even further when compounded with existing inequalities and injustices, impacting vulnerable and marginalised communities the hardest.

“Being affected by energy poverty can have severe implications for vulnerable, low-income and marginalised groups on service access, health, wellbeing, social inclusion, economic opportunity and quality of life. Families should not need to choose between food and paying their energy bills.” - (C40 Cities)

Global energy crises highlight the fragility and injustice of our existing energy system and fluctuating prices, privatisation, and poor infrastructure can all be factors which may push an individual into energy poverty.

An Energy Crisis

What is the energy crisis?

Over 2021, a worldwide squeeze on gas and energy supplies resulted in wholesale gas prices rising to unprecedented levels. By February 2022, wholesale gas prices had reportedly increased by 250% since January 2021 and by 70% in August alone, hitting a record price of 450p per therm (unit of heat energy) in December. (Independent)

How did this energy crisis happen?

A number of technical and geopolitical issues contributed to the energy crisis. For example, Russia’s state-owned Gazprom is the world’s largest gas producer and typically supplies more than a third of the needs of countries across the European Union, but in November flows dwindled to a six-year low.

COVID-19 and the global pandemic also impacted gas flows. The outbreak of the coronavirus pandemic at the start of 2020 led to a year of historically low global energy consumption as businesses shut down and traffic came to a standstill. In response, governments and businesses have since equated ‘recovery’ with meaning an economic ‘bounceback’. This saw demand for energy soar in 2021, placing strain on global supplies as nations sought to boost GDP once more following the impacts of the pandemic.

Climate impacts, including longer winters, hotter summers and extreme weather events are another factor playing a role in our energy crisis.

A bitter winter experienced in the northern hemisphere in 2020/21 put pressure on supplies and stored gas supplies dropped as individuals and businesses required more energy simply to keep warm. Meanwhile, the balmy summer experienced in Asia, particularly in China, led to a skyrocketing demand for air-conditioning units to cope with the sticky heat. As burning fossil fuels further impacts our climate, this could become an increasingly vicious cycle.

Rising Prices

Fluctuating and rising gas prices are impacting many countries across the world. Collectively, European gas prices increased by more than 30% at the start of 2022. (Guardian)

The UK is one of Europe's biggest users of natural gas: around 85% of homes have gas central heating, and it also generates a third of the country's electricity. There, electricity and gas prices are set to rise by around 50%. (BBC)

The UK has an energy price cap, set by the government, which caps the maximum amount a utility company can charge an average customer per year. However, the volatile gas prices around the world mean they raised this price cap by 54%.

With further extreme weather events, and mounting geopolitical tensions impacting both the demand and supply of gas, many individuals are left wondering how they will simply keep warm.

“There are lots of people out there that can afford the increase and won’t like it, but there are also millions of people who will be thrown into fuel poverty, who will get close to having that choice between heating and eating.” (UK money-saving expert Martin Lewis)

A Matter of Justice

Following gas price rises, 1 in 10 people in the U.K. may not be able to afford consistent heat and electricity, being placed in energy poverty. (Bloomberg)

Traditionally, when confronted with higher energy bills, individuals would usually be encouraged to ‘shop around’ for a cheaper deal - supposedly one of the benefits of the free market. With the rising price cap, however, consumers in the UK have been advised that this will no longer result in finding more affordable energy.

Instead, households are being encouraged to improve the energy efficiency of their homes, with news outlets sharing tips such as using LED light bulbs only, draught-proofing windows and doors, and running the washing machine or dishwasher once less per week. (BBC)

Whilst energy-saving changes are still useful and a good idea, individuals should not be placed in a position where they either heat their home or eat food that day.

The global surge in energy prices and the economic impacts of the pandemic means that across the world, individuals suffer from the shortfalls and short-sightedness of fossil fuel dependency.

What about jobs?

Energy crises such as this don’t just impact consumers, they also impact the energy retailers. For example, since wholesale gas prices started to spike, retailers unable to absorb the rising costs of wholesale gas have collapsed. In the UK, 28 retail energy suppliers and several smaller companies have collapsed, affecting more than four million households. (BBC)

Furthermore, other factories and industries have had to shut down, unable to meet the high energy costs. (Guardian)

This is just a further reminder of why we need a Green New Deal, in order to ensure secure, well-paid, green jobs in green infrastructure.

“The energy crisis we are experiencing today is a consequence of the failure to plan for, deliver and fund a secure and just transition to a decarbonized power sector.” (C40 Cities)

The Role of a Just Transition

Ultimately, the energy crisis (interconnected with issues of energy poverty and the structural dependency on fossil fuels) brings us back to the recurrent call for a just transition.

In November 2021, a joint statement by the Organisation for Economic Co-operation and Development (OECD) and International Energy Agency (IEA) emphasised that the energy price surge underlines the need to accelerate clean energy transitions rather than subsidise fossil fuels.

“Countries should resist raising government support for fossil fuels [...] Instead, given the existential threat of climate change and the need for a green recovery, they should accelerate investment in sustainable energy infrastructure and the creation of green jobs.”

“Governments should be planning for a cleaner and fairer energy future in which everyone benefits from modern energy services. This means expanding access to clean energy, especially for the most vulnerable populations, not maintaining market distortions that favour polluting fuels,” speaks IEA Executive Director, Fatih Birol.

Also in November 2021, a network of mayors of nearly 100 cities collaborating to deliver urgent climate action (called C40) released a joint statement emphasising the need for rapid decarbonisation and climate action. Crucially, however, this transition must ensure that alternative energy sources are secure, affordable, clean, and reliable and that the costs do not fall on the most vulnerable, marginalised and discriminated people of our societies.

“We will get through this crisis but we also must prepare for the next one. Engagement, Collaboration and adopting a pro-poor approach that prioritises the most marginalised are key to simultaneously tackling the energy crisis and energy poverty as well as the twin crises of climate change and inequality.”

What could this look like?

In their statement, the C40 propose action to ensure individuals do not see inequalities exacerbated due to energy crises, or by future transition policy, by:

Moving forward on climate action, not back, and accelerating a just transition towards a fully decarbonized energy system that provides affordable, reliable, renewable and clean energy for all while creating decent and inclusive jobs at scale.
Undertaking energy efficiency measures such as programs to deeply retrofit social, public and low-income housing, reducing energy demand and lowering energy bills, while creating quality and new skilled jobs, especially for low-income and marginalized communities.
Releasing safety net plans for low income and vulnerable households through to 2023 and plans for equitable and inclusive access to energy within the energy transition.
Investing in local services deployed by cities, including municipal, distributed, and community-based energy, to tackle energy poverty and assist families and hard to reach groups.

These actions closely align with the principles of a Green New Deal of which would support the just transition towards societies supported by renewable energy, with justice at their core.

The Green New Deal are demanding government intervention to immediately deliver an affordable price cap on energy bills and to commit to ambitious investment to insulate homes and develop secure, domestic, renewable energy sources, paid for by taxing fossil fuel companies. Sign the petition here!