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The Ukrainian War and Energy Poverty: What Can Be Done and What Should Be Avoided

Energy poverty is a social, economic, and health problem accentuated by economic downturns, climate change, and technological advancements. It is defined as the unaffordability of or lack of access to energy services for cooking, heating, cooling, transportation, and communication. It has severe economic and social consequences. Energy poverty may affect physical and mental health, and worsen social inclusion in situations where social media predominates as a means of interaction and communication between people. It also leads to educational inequality, as almost all forms of education in developed and developing countries have become partly online and away from traditional methods. 

Energy poverty is not just a problem faced by developing countries. In Europe, the number of households experiencing energy poverty will likely exceed 50 million because of war-induced spikes in energy prices. With the Covid pandemic, energy services became more fragmented, so that energy poverty grew globally. The war in Ukraine is transforming energy poverty into a significant long-term issue that may necessitate the implementation of costly energy policies. It has already led to the violation of the basic principles of EU Energy Policy: Supply security, affordability, and environmental sustainability. Higher energy prices and expected oil and gas supply disruptions have raised energy poverty concerns. If Russia continues to use natural gas oil resources as an economic and political weapon, Europe may face an unprecedented increase in the number of energy-poor households next winter. As a result, energy poverty has emerged as a primary target for sustainable development.

Experts have already proposed increasing the share of renewable energy and energy efficiency as a long-run solution. Gas is an expensive fuel source for electricity generation, whereas oil is a costly fuel source in the transportation sector. In order to maximize environmental and social sustainability and to tackle energy poverty quickly and effectively, we must abandon fossil fuel resources with high social costs. In the long run, a solution based on tax policy, economic planning, or technological improvements may also be successful. We cannot, however, tell energy-poor households to wait for the long-term impacts of policies to take effect, particularly in the midst of a bitter winter. Immediate measures such as subsidies and free quotas are necessary to help out vulnerable households. For such efforts to succeed, energy poverty must be well defined, households' awareness must be raised, and incentives for efficient energy use must be placed.

Energy consumption behaviors of energy-poor households may provide insights for such measures to work in the shorter run. Monitoring household energy usage and identifying habitual consumption patterns paves the way to tailor-made solutions to households. 

Meters and big data, among other technological advancements, enable us to monitor household energy consumption and income and analyze energy consumption behaviors. Dynamic and continuous monitoring of households will allow decision-makers, social workers, and local governments to produce household-specific solutions quickly and efficiently. 

There is no way we can expect all households to react the same way to high prices or lack of energy services, as their sensitivity to these changes could differ. As a result, a policy that does not account for household behavioral differences would result in inefficient policy implementation. The monitoring results can be combined with energy usage training and the replacement of energy-inefficient home appliances. Our goal can be to create a short-run and efficient solution when we combine analysis of energy consumption behavior with technology adoption and awareness education. 

An initial observation can reveal which immediate measures, such as energy checks, no-tax policies, free energy, support for income, appliance replacement and training, simple household repairs, and free public transportation, are necessary to lower a household's vulnerability. With dynamic monitoring, solutions can be prioritized and re-prioritized for each energy-poor household, ensuring continuous improvement. 

Experts and policymakers propose three risky solutions, which should not take place since they may trigger larger economic and environmental problems while attempting to alleviate energy poverty. These three actions may appear as the most cost-effective and time-efficient solutions by governments. First, it may appear convenient to hoard nuclear energy during this crisis. Germany and France are already talking about it. This solution, however, should not obstruct the action taken to increase renewable energy investments and thus should not go beyond a short-term and quick solution with the already established nuclear plants. Second, shifting from one dominant energy supplier to another may alter global energy politics and cause similar supply security problems in the long run. It would only postpone the problem, and it will not be a sustainable solution. Lastly, countries may consider returning to coal as a reliable energy source. Our emissions are already at the limit of what we can produce, so this should not happen.

Ramazan Sari
Ramazan Sari

Ramazan Sari is an energy economist affiliated with the Technical University of Denmark in the Department of Technology, Management and Economics. He is the editor of Routledge Handbook of Energy Economics and has written chapters in books by Springer and Edward Elgar. His recent research is on energy justice, energy poverty and social acceptance aspect of energy and environmental policies.

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