Fuel  poverty occurs when a household cannot afford to adequately heat their home or meet basic energy requirements. National Energy Action’s figures for April 2024,  show 6 million UK households are in fuel poverty.  Fuel poverty problem needs to be addressed along with decarbonisation of heating and achieving the net zero target. This study aims to identify the main causes of fuel poverty and critically analyse the impact of policy measures taken by the UK government, with a view to provide alternative green approaches to combat the crisis. The government needs to control inflation which has a significant bearing on the fuel poverty. Oil prices affect fuel poverty but are driven by international market. Government needs to focus on alternative energy sources to reduce the dependence on oil because of the lack of control on the oil price

Singh, Anita

Strachan, Peter

English

Open Access Institutional Repository at Robert Gordon University

SINGH, A. and STRACHAN, P. 2024. Decarbonising heating and fuel poverty in the UK: causes, policy implications, and the next steps. Presented at the 2024 All-energy exhibition and conference, 15-16 May 2024, Glasgow, UK.     This document was downloaded from https://openair.rgu.ac.uk Decarbonising heating and fuel poverty in the UK: causes, policy implications, and the next steps. SINGH, A. and STRACHAN, P. 2024 Decarbonising Heating and Fuel Poverty in the UK: Causes, Policy Implications, and Next StepsDr. Anita Singh Prof. Peter StrachanAberdeen Business SchoolRobert Gordon University02 July 2024 1Introduction• Fuel poverty occurs when a household cannot afford to adequately heat their home or meet basic energy requirements.• National Energy Action’s figures for April 2024,  show 6 million UK households are in fuel poverty. • Fuel poverty problem needs to be addressed along with decarbonisation of heating and achieving the net zero target.02 July 2024 2Aim & Objectives of the Research This study aims to identify the main causes of fuel poverty and critically analyse the impact of policy measures taken by the UK government, with a view to provide alternative green approaches to combat the crisis. The objective of the research is to:(i) Evaluate the main causes and impact of fuel poverty within the UK by drawing parameters from various definitions.(ii) Analyse the impact of government policy on the fuel poverty.(iii) Identify the renewable energy options.(iv) Recommend  policy measures. 02 July 2024 3Fuel Poverty Definitions• Inability to afford adequate warmth at home (Bradshaw and Hutton 1983)  • Energy expenditure exceeding 10% of the household income (Boardman 1991)  Northern Island and Wales• Fuel poverty in the England is now measured using the Low Income Low Energy Efficiency (LILEE) indicator. Under this indicator, a household is considered to be fuel poor if:• they are living in a property with a fuel poverty energy efficiency rating of band D or below and• when they spend the required amount to heat their home, they are left with a residual income below the official poverty line.02 July 2024 4Existing Studies on Fuel Poverty• Fuel poverty and energy poverty have been used interchangeably. (Deller Turner & Price 2021; Li et at 2014)• Several studies have been conducted to analyse the definition of fuel poverty (Thomson & Snell 2012, Hill 2012).• Drivers of fuel poverty analysed in the literature (Thomson & Snell 2012, Fillipidou et al 2018, Bouzarouski et al 2018).• Impact of fuel poverty on the health and wellbeing of individuals especially vulnerable groups studied (Awaworyi & Smyth, 2020; Llorca et al. 2020; Wang et al 2022).• The government policy and interventions have been critically analysed (Matiolli et al 2018).• In addition to managing the fuel poverty issues, decarbonising heating is also an additional challenge that the UK policy makers. Several studies have evaluated the renewable energy options available (Chaudry et al., 2015; Risinggård  et al., 2023)02 July 2024 5Gap in the Literature and Contribution• Most of the existing literature focuses on the association of fuel poverty with a limited number of parameters and lacks a robust multi variable analysis.• Causes of fuel poverty and its impacts are linked to each other such that if a variable A impacts a variable B (A->B) and B affects C (B->C), it is possible that A may have an influence on C (A->C) or vice versa. It is therefore important to study the causes and effects in a single model.• While most studies have used cross-sectional data for analysis this research is based on representative panel data for 13 years, focusing on the objective and quantifiable subjective measures of fuel poverty, using Structured Equation Model. • The findings from SEM analysis are then evaluated to consider the options of resolving the fuel poverty issues along with reducing GHG emissions.• Most recent definition of Fuel Poverty has been used.02 July 2024 6Research MethodologyPositivism Deductive QuantitativePublished (Secondary Sources)Panel Data 2011-2020Systematic Equation ModellingAnd Regression AnalysisAnalysisTime HorizonData MethodologyApproachPhilosophyMethodology02 July 2024 8Partial Least Squares (PLS) Structural Equation Modelling (SEM) used  for building the theory.Secondary data from various sources have been analysed.Data set for 13 years (2010-2022) used for analysis to accommodate comparable renewable energy data.SEM helps in modelling causal networks of effects simultaneously—rather than in a piecemeal manner.SEM can model multiple independent variables (IV) and multiple dependent variables (DV), chains of causal effects and indirect effects, and the latent constructs that variables are meant to measure.ImpactCause1Cause2Cause 3Cause 4Natural gas imports , InflationWinter fuel payments, Environmental taxationHousehold expenditure Oil price, Gas priceNumber of disconnections for nonpayment electricity and gas , excess winter deathsThe Theoretical ModelFuel PovertyTheoretical model Proposed𝑀𝑀𝑀 − 𝑁𝑁𝑁𝑁𝑁𝑁 = 𝑓𝑓 𝑥𝑥𝑀, , 𝑥𝑥2, 𝑥𝑥3, 𝑥𝑥4, 𝑥𝑥5, 𝑥𝑥6, 𝑥𝑥7𝑀𝑀𝑀 − 𝑁𝑁𝑁𝑁𝑁𝑁 ⋯ (𝑧𝑧𝑀, 𝑧𝑧2, 𝑧𝑧3)Therefore𝑥𝑥𝑀, , 𝑥𝑥2, 𝑥𝑥3, 𝑥𝑥4, 𝑥𝑥5, 𝑥𝑥6, 𝑥𝑥7 ⋯ (𝑧𝑧𝑀, 𝑧𝑧2, 𝑧𝑧3)02 July 2024 10x1 Total Environmental tax (ET)x2 Net Gas Imports (NGI)x3 Total Household Expenditure (THE)x4 Oil Price (OP)x5 Gas Price (GP)x6 Winter fuel payments (WFP)x7 Inflation (IFL)z1 Electricity disconnections (NDE)z2 Gas disconnections (NDG)z3 Excess winter deaths (EWD)Structural Equation Model for Fuel Poverty02 July 2024 11Results• Total household expenditure of energy has strong & significant relationship with FP and regression weight of -0.8 • FP is strongly influenced by total environmental tax with regression weight of 0.5, result is statistically significant• Winter Fuel Payment also has a strong and significant impact on FP• FP has a direct bearing on electricity and gas disconnections due to non-payment.• Though FP impact Extra Winter Deaths results are not statistically significant02 July 2024 12Interpretation of ResultsHousehold ExpenditureWinter Fuel PaymentsOil Prices 02 July 2024 13Inflation Disconnection of Gas and ElectricityHighEnv TaxGas PriceExcess Winter Deaths Solving Fuel Poverty in a Green Way• There is a drive to move to low carbon energy vectors like electricity, hydrogen and district heating that does not generate CO2 at the source. • In order to meet the target of reducing GHG emissions from buildings to near zero by 2050 there is a need for wholistic strategy.• The policy needs to address the issues of the cost of energy heating technologies and incentives for use of renewable energy • A post hoc regression analysis conducted to evaluate the impact of use of green energy on Fuel Poverty in the UK.02 July 2024 14Regression Analysis• 𝑁𝑁𝑁𝑁𝑁𝑁 = 𝑓𝑓 𝑁𝑁𝐹𝐹,,𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺,𝐺𝐺𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸,𝐸𝐸𝐺𝐺𝐺𝐺𝐺𝐺𝐸𝐸𝑅𝑅• FC= Final consumption of renewable energy in the UK (in 1,000 metric tons of oil equivalent)• GHGE= Estimated territorial greenhouse gas emissions , by million tonnes carbon dioxide equivalent (MtCO2e)• ESOLAR = Energy used for heat generation from active solar heating (in 1,000 metric tons of oil equivalent)• REHEATING = Renewable energy used for heating and cooling (in 1,000 metric tons of oil equivalent)02 July 2024 15Regression Results02 July 2024 16NFP FC GHGE ESOLAR REHEATINGPearson Correlation NFP 1 -0.97 0.735 -0.871 -0.882FC -0.97 1 -0.691 0.778 0.869GHGE 0.735 -0.691 1 -0.843 -0.552ESOLAR -0.871 0.778 -0.843 1 0.717REHEATING -0.882 0.869 -0.552 0.717 1Significance (Model Summary)Model R R SquareAdjusted R SquareStd. Error of the Estimate Change StatisticsR Square Change F Change df1 df2Sig. F Change.989a 0.979 0.965 103.722 0.979 68.928 4 6<.001a Predictors: (Constant), REHEATING, GHGE, ESOLAR, FC02 July 2024 17Model Summary02 July 2024 18Unstandardized CoefficientsStandardized Coefficients t Sig.B Std. Error Beta(Constant) 7315.354 1239.647 5.901 0.001FC -0.085 0.018 -0.673 -4.775 0.003GHGE -4.842 9.264 -0.061 -0.523 0.62ESOLAR -55.697 22.476 -0.334 -2.478 0.048REHEATING -0.085 0.119 -0.091 -0.711 0.504Post Hoc Regression ResultsUse of Renewable energy for heating has a positive impact.Use of Solar Energy for heating has significant impact.Use of Renewable energy has an impact on GHG.Consumption of renewable energy has a significant impact.02 July 2024 19Result as compared to policy• The UK government is aiming to combat the fuel poverty crisis by improving household incomes. As per this study, that is a step in the right direction.• The government also seeks to improve the energy efficiency by improving the efficient housing stock. This has not come out as a significant variable. • Government is also implementing programmes such as the Winter Fuel Payment to help vulnerable customers. This study demonstrates that Winter fuel payment is counterproductive as some of existing studies have also concluded. • UK Government’s Energy Company Obligations including environmental taxation which does not have a significant impact on fuel poverty. • The government needs to control inflation which has a significant bearing on the fuel poverty. Oil prices affect fuel poverty but are driven by international market. Government needs to focus on alternative energy sources to reduce the dependence on oil because of the lack of control on the oil price. 02 July 2024 20References02 July 2024 21• BOARDMAN, B., 1991. Fuel Poverty: From Cold Homes to Affordable Warmth. Belhaven Press.• BOUZAROVSKI, S., 2018. Energy Poverty. Cham: Springer International Publishing.• BRADSHAW, J. and HUTTON, S., 1983. Social policy options and fuel poverty. Journal of Economic Psychology, 3(3–4), pp. 249–266.• CRERAR, P., 2022. Two-thirds of UK families could be in fuel poverty by January, research finds. The Guardian Labs. Available from: https://www.theguardian.com/society/2022/aug/17/two-thirds-of-uk-families-could-be-in-fuel-poverty-by-january-research-finds [Accessed 23 Oct 2022].• DELLER, D., TURNER, G. and PRICE, C.W., 2021. Fuel Poverty: Potentially Inconsistent Indicators and Where Next? Available from: https://ssrn.com/abstract=3706321.• FILIPPIDOU, F. et al., 2019. Mapping energy poverty in the EU: policies, metrics and data.• FILIPPIDOU, F., NIEBOER, N. and VISSCHER, H., 2018. Effectiveness of energy renovations: a reassessment based on actual consumption savings. Energy Efficiency, 12(1), pp. 19–35.References02 July 2024 22• HILL, J., 2012. Independent Review Projects Fuel Poverty to Worsen and Calls for Reinvigorated Strategy. Available from: www.decc.gov.uk/hillsfuelpovertyreview.• MATTIOLI, G., WADUD, Z. and LUCAS, K., 2018. Vulnerability to fuel price increases in the UK: A household level analysis. Transportation Research Part A: Policy and Practice, 113, pp. 227–242.• Li, K., LLOYD, B., LIANG, X.J. and WEI, Y.M., 2014. Energy poor or fuel poor: What are the differences?. Energy Policy, 68, pp.476-481.• PYE, S. et al., 2016. Addressing Energy Poverty and Vulnerable Consumers in the Energy Sector Across the EU. L’Europe En Formation, n° 378(4), pp. 64–89.• THOMSON, H. and SNELL, C., 2013. Quantifying the prevalence of fuel poverty across the European Union. Energy Policy, 52, pp. 563–572.• THOMSON, H., SNELL, C. and LIDDELL, C., 2016. Fuel poverty in the European Union: a concept in need of definition? People Place and Policy Online, 10(1), pp. 5–24.• WANG, C., WANG, J. and NORBÄCK, D., 2022. A Systematic Review of Associations between Energy Use, Fuel Poverty, Energy Efficiency Improvements and Health. International Journal of Environmental Research and Public Health.

Decarbonising heating and fuel poverty in the UK: causes, policy implications, and the next steps.

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Decarbonising heating and fuel poverty in the UK: causes, policy implications, and the next steps.

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