Combating Energy Poverty in the Face of the COVID-19 Pandemic and the Global Economic Uncertainty

Abstract

The effects of the global COVID-19 pandemic on the energy sector and the economy as a whole are being followed by the global energy crisis, which has been exacerbated by the war in Ukraine. The situation is particularly difficult for European countries, which are heavily dependent on imported energy from Russia. In the face of such economic uncertainty, it is necessary to analyze and assess the energy poverty situation in the region. The article overviews the extent of energy poverty among European Union (EU) countries and determines regional differences by comparing the situation, trends and policy measures applied, followed by the challenges and opportunities to combat energy poverty among households during the global COVID-19 crisis and economic uncertainty. A scientific literature review was performed and the effect of the COVID-19 pandemic on the energy poverty of households was identified. Moreover, a set of indicators reflecting the extent of energy poverty in different EU countries has been developed and an analysis of indicators was performed by comparing the situation, trends and policy measures applied.

1. Introduction

In the beginning of 2019, the world faced the COVID-19 pandemic [1], which was followed by the global energy crisis in the end of 2021. The energy prices increased significantly and the share of people unable to pay their bills for energy increased in many regions [2,3]. The European Union (EU) is dependent on imported energy, especially natural gas, where the biggest portion has come from Russia for many years [4]. Russia’s aggression against Ukraine, which began on 24 February 2022, and Europe’s response to the illegal invasion, have exacerbated the energy crisis in Europe. Energy prices have risen significantly; the government of Germany froze the certification of the Nord Stream 2. The burden of rising energy prices is falling on households through the rising prices of different products and services and a higher share of income for energy bills. According to the statistics, the population unable to adequately heat their homes rose almost 20% during the first year of the COVID-19 pandemic (from 6.9% to 8.2%) [5]. The results of the study by Che and Jiang [6] confirmed that economic uncertainty effects expenditure and energy poverty among people. Such conclusions have been reached in the analysis of both developing and developed countries, including nine European countries. It can be assumed that with significant increases in energy prices, energy poverty and the risk to face it will increase in the near future [7]. Therefore, it is very important to pay significant attention to this problem, both at regional and at a national level.

For many years, the EU energy policy has had a clear direction toward the transition to green energy and the increase in energy efficiency. A big effort has been done and huge amounts of documents have been written to encourage this energy transition. However, the challenges that face the European energy sector today requires fundamental actions to accelerate the energy transition and decrease energy dependence from Russia. A total of 90% of the EU gas consumption is imported, of which around 45% comes from Russia. Moreover, 25% of the oil and 45% of the coal comes from Russia. It should be noted that the level of imported energy varies across countries. The ability of countries to adapt to the changed situation also varies. Some countries have been able to react quickly and abandon energy from Russia, e.g., the Baltic states. Such a rapid abandonment was due to actions to increase the level of energy security in the region. However, other countries need a long transition process. Therefore, the EU has tried to find alternative energy sources and to start to free themselves from Russian fossil fuels by 2030. All these changes will have an impact on the energy price and will be felt by final energy consumers, at least in the short term.

However, there is no single EU-wide measure to reduce the effects of the pandemic and the energy crisis on the energy poverty of households. Countries are looking for ways to tackle rising inflation and rising energy prices. For example, the government of Poland temporarily abolished the value added tax on food and gas, as well as reduced the tax on fuel. In other countries, the interest in support measures for renewable technologies development in the household sector has increased significantly. For example, in Lithuania, the support measures for solar energy have had a huge popularity in the last year.

The fight against energy poverty in Europe is taking place through the increase in energy efficiency and the development of renewable energy in households. Despite the active initiation of actions at the EU level to combat energy poverty, the focus and policies across member states vary. Significant differences can be observed both in the national documents of the countries and in their strategies and energy development plans. In the face of the challenges caused by the COVID-19 pandemic to the energy sector [3,8,9], it is necessary to analyze and monitor how the current pandemic situation may affect energy poverty among households. The research analyzing energy poverty issues has risen significantly in recent years [10,11,12]; moreover, there is a huge amount of studies analyzing and evaluating the impact of the pandemic to the energy sector. Despite that, there are very few studies examining the linkages between the impact of the pandemic on energy poverty in the context of the COVID-19 pandemic, despite the fact that the impact of energy on households is obvious. The current paper seeks to overview the extent of energy poverty among EU countries and to determine the regional differences by comparing the situation, trends and policy measures applied, followed by the challenges and opportunities to combat energy poverty among households during the global COVID-19 crisis and in the context of economic uncertainty. The identification of disparities and insights provided are important for the improvement of the current energy policy of the EU in the context of the global energy crisis and energy dependency from Russian oil and natural gas. The paper could serve as a basis for future research. Moreover, the situation analysis and the identified regional disparities among member states will allow to develop and implement new and more effective measures.

The rest of the paper divided into several subsections. The second section of the paper provides a literature review and identifies the effect of the COVID-19 pandemic on the energy poverty of households. The third section presents the methods and data of the research. The fourth section provides an overview of energy poverty in the EU member states, where the EU policy measures to fight against energy poverty are discussed, the diversity of energy poverty in Europe in terms of different indicators is analyzed and the national policy measures to fight energy poverty in the context of the COVID-19 pandemic are provided.

2. Literature Review

The COVID-19 pandemic caused multiple effects on the energy sector and its sustainability. There are several review articles in the scientific literature analyzing the impact of the pandemic on the energy sector as a whole or on its specific aspects. The study by Siksnelyte-Butkiene [3] reviewed publications analyzing the changes caused by the pandemic in the energy sector. It identified the five main impact areas, such as: the impact on consumption and energy demand; the impact on air pollution and air quality; the impact on investments in new renewable energy projects; the impact on the energy poverty of households; and the impact on energy system flexibility. Kumar et al. [13] highlighted the relationship between the pandemic and greenhouse gas (GHG) emissions and reviewed scientific literature in the field. Moreover, the authors compared the GHG emissions in different time horizons and made projections for the post-COVID-19 era. Based on the projections and data analysis of different indicators, the recovery plan in the context of sustainable energy development was presented and insights towards the sustainable development goals were provided. Krarti and Aldubyan [14] provided a systematic review analysis for the identification of energy consumption trends in the residential sector. The results showed a significant increase in consumption due to higher occupancy during working hours, where energy for heating, lighting and air conditioning purposes were used much more intensively as before the pandemic. The analysis allowed to create recommendations for the efficient usage of energy. Moreover, the investments in renewable energy technologies were stressed in the article as one of the solutions to fight against increase in energy consumption and energy bills. In order to find out effects of the COVID-19 pandemic to the energy system and electricity grids, Navon et al. [15] reviewed scientific literature and analyzed and measured data. The authors presented patterns of electricity demand and generation, deviations and performed load forecasting. Zhong et al. [16] performed a comprehensive review of the pandemic effects to the electricity sector. The changes in electricity demand, daily load profile and load composition were determined, especially in the period of lockdowns. Moreover, the changes in renewable penetration were detected, the high pressure on system operators was identified and the challenges for the whole energy system maintenance and management were stressed. Lu et al. [17] overviewed the consequences of the pandemic on the energy price, demand, energy policy issues, countermeasures and scientific research directions. Moreover, the necessity to promote the transition to renewable energy was highlighted in the study.

The restrictions imposed during the lockdowns caused many challenges for many sectors of the economy. The growing number of cases slowed down production and caused supply difficulties for many economical activities, the economic uncertainty affected investments, restrictions affected the incomes of employees, changed energy consumption patterns and increased the energy bills of households. Several studies analyzing the impact of the pandemic on energy poverty can be found in the literature. However, there are relatively few studies of this issue, although the scale of the problem is undoubtedly large.

Some studies focused on the assessment of the level of energy poverty in the context of the pandemic. Nagaj and Korpysa [18] measured the increase of the level of energy poverty during the first years of the pandemic in Poland. The research results revealed that the lockdowns affected the disposable income of people and increased the share of expenditures for energy needs. It was determined that the most vulnerable households have been affected the most by the pandemic. While the results of the study by Biernat-Jarka et al. [19] showed that the level of energy poverty in Poland has been steadily declining since before the pandemic. The same results are demonstrated in studies by other authors in different countries of the world. Clark et al. [20] analyzed energy poverty among students in New Zealand. It was found that the pandemic affected energy consumption and increased energy bills among students. As a result, students already experiencing energy poverty experienced significant stress. Mamica et al. [21] analyzed the factors which affect the extent of energy poverty among Polish students. The study also considered the changes of energy consumption during the first lockdown. It was determined that the share of income to meet energy needs increased. As a result, the level of inappropriate temperature in the dwellings of students was identified.

The increase of the level of energy poverty can cause multiple effects on other social issues. The research by Memmott et al. [22] revealed that the increase of the level of energy poverty can affect the extent of racial disparities among energy-poor people. The authors analyzed the energy poverty issue during the first months of the pandemic in the United States. It was found that Black and Hispanic people, people with young children and people living in inefficient dwellings were more likely to experience energy deprivation. Although the same conditions existed before the pandemic, the scale of the problem increased significantly during the pandemic. Ambrose et al. [23] overviewed the extent of energy poverty and policy measures in the United Kingdom. A significant increase in the number of fuel-poor households during the first year of the COVID-19 pandemic was found. The authors paid attention to the psycho-social aspects of energy-poor people during the lockdowns, where poor quality and energy inefficient dwellings negatively affected daily life. Accordingly, the study revealed the additional consequences of the pandemic for energy-poor households and determined the key aspects for policy on energy poverty in the context of the pandemic. First of all, the necessity to improve the energy efficiency of buildings was stressed. Secondly, the need to address the financial difficulties of households was identified. Thirdly, the need to provide access to high-quality public spaces, at least during the closures, was emphasized.

Other studies focused on the analysis between the energy poverty issues and air pollution in the context of the pandemic. The results of the study by Shupler et al. [24] showed that the restrictions imposed not only decreased the disposable income of people, but also forced households to change cleaner cooking fuels to more polluting ones. Martinez-Soto et al. [25] analyzed how the increase of energy poverty affected the air pollution in Chile. The commercial and low- and middle-income residential areas were analyzed, and the results compared before the pandemic and in the first year of the pandemic. It was found that the pollution significantly increased in areas where live people with higher income. Low-income households could not afford to warm up enough. Accordingly, it indicated that the pandemic also exacerbated the problem and scale of the energy deprivation that low-income households had already experienced before the pandemic. The results of the study also proved the necessity to develop clean energy technologies in the country, where wood is the main source for heating. The relationship between the CO₂ emissions and the social groups of households was revealed in the study by Huang and Tian [26]). The input–output model was applied for the analysis of eight developing countries. The significant CO₂ emissions inequality was noticed among countries under analysis, especially in Russia and China. Moreover, the considerable inequality of CO₂ emissions among the different social groups was found in many of the countries analyzed. The hypothetical extraction method was applied for the examination of the COVID-19 impact on CO₂ emissions inequality among different income groups. Overall, the decrease in emissions inequality was found. However, the simulations showed that inequality in emissions among countries and different income groups of households will persist. Therefore, the implementation of energy efficiency measures and the development of new renewable energy projects are essential, not only for the reduction of global emissions, but also for alleviating the issues of energy poverty. Gebreslassie [27] revealed the challenges posed by the pandemic in tackling energy poverty due to technology supply disruptions. The author presented a case study of Ethiopia, where the decrease of income of solar technologies end-users and the lack of technologies in the market were found. This situation is forcing the closure of local businesses operating in the solar energy market and is affecting the electrification of remote areas.

The linkages between the COVID-19 pandemic effects and the energy poverty of households are shown in Figure 1. Based on these links, this study hypothesizes that the pandemic increased energy poverty among European households. The research methodology and data are presented and justified in the next section.

The other part of the articles analyzed measured the elevating energy poverty or risk to face it. For example, Mastropietro et al. [28] reviewed and classified the measures for the energy consumers’ protection around the world. The authors identified the advantages and disadvantages of the measures. Moreover, the necessity for proper financing was stressed. The other study by Mastropietro [29] assessed emergency measures in Spain by applying the regulatory theory and analysis of international practice. It was concluded that measures should be based on clear strategy, and the author highlighted the importance of communication strategies to reach more households and achieve the effectiveness of the measures implemented. Bienvenido-Huertas [30] analyzed the unemployment benefits, as well as social measures and their effectiveness, in Spain during the first lockdown. According to the results, these measures can mitigate energy poverty among people who lost their jobs. However, the measures taken are insufficient and need to be reconsidered and improved in the context of the pandemic situation. The author proposed, as an effective instrument, to consider a percentage discount on energy bills.

Interesting research was performed by Bouzarovski et al. [31], where the national energy and climate plans were evaluated in terms of the alleviation of energy poverty. The national documents of the countries were analyzed according to energy justice principles, which were grouped into two categories, “access to justice” and “provision of resources”. According to the results, such countries as Belgium, Cyprus, France, Italy, Lithuania, Malta, Romania and Spain have a well-developed energy poverty policy in different decision-making areas. Moreover, it was found that southern and eastern countries pay more attention to the reasons and consequences of the issues of energy poverty. These countries can be identified as having a specific direction to improve the energy efficiency of buildings and household income, while countries with well-developed energy policies and social mechanisms focus on governance capacity to combat the problem.

Carfora et al. [7] made a forecast of energy poverty across the EU countries until 2025. According to the results, the increase of energy-poor households due to economic, energy, social and environmental conditions will be addressed slowly and at different rates among countries. Forecasts to 2022 showed that the biggest increase in energy poverty will be in Bulgaria, Latvia, Italy and Greece. The decrease of the problem is expected in Ireland, The Netherlands, Slovakia and Sweden within the short term. The study also shows that the pandemic has extended the gap between leaders and the most backward countries.

3. Methods and Data

The methodology of the research consists of four main steps. Firstly, a review of the scientific literature in the Web of Science database on the combination of topics “COVID” and “energy poverty” was performed. The effects of the pandemic on the energy sector were identified and studies on the impact on energy poverty were analyzed. This allowed to determine the links between the COVID-19 pandemic effects and the energy poverty of households. Secondly, a set of indicators reflecting the extent of energy poverty in different EU countries has been developed on the basis of established links. Thirdly, an analysis of indicators was performed and the regional differences among countries were determined by comparing the situation, trends and policy measures applied. Fourth, the national policy measures to combat the growth of energy poverty are reviewed.

Three groups of indicators are used to evaluate the impact of the pandemic to the energy poverty among households in the EU countries. In order to encourage the repeatability of the research and the application of the proposed indicator set for the monitoring of the progress in the future, the aim was to make all indicators easy to find and publicly available. It sought to create a set that was suitable for all countries. All selected indicators are standardized and comparable. The level of energy poverty is expressed through three self-reported subjective indicators. The indicators related to energy poverty issues from the EU Statistics on Income and Living Conditions (EU-SILC) are an important measure to track the progress across the EU member states. These indicators are quite widely used in different studies, both to compare them over different periods and to construct indices for energy poverty assessments [12]. As objective indicators are used energy prices and net income. The changes in electricity and gas prices for households, including all taxes and levies, are measured. Moreover, the mean net income among households reveals energy poverty inequality among people in each country. Indicators set for the evaluation of the impact of the COVID-19 pandemic on the extent of energy poverty in European countries is presented in

Table 1. Indicators set.

Indicators Group	Indicators	Justification	Data
Energy poverty level	Share of people unable to keep home adequately warm	Changes in population unable to heat home adequately reveals consumption changes, changes in disposable income of people and energy prices.	[5]
	Share of people having arrears on utility bills	Changes in people having arrears on utility reveals consumption changes, changes in disposable income of people and energy prices.	[5]
	Share of people living in buildings with leakages	Changes in share of population living in buildings with leakages show the implementation of EU energy policy priorities at national level.	[5]
Energy price	Electricity prices for household consumers (including all taxes and levies)	Electricity price changes are directly related to the issue of energy poverty through the share of income to meet energy needs.	[4]
	Gas prices for household consumers (including all taxes and levies)	Gas price changes are directly related to the issue of energy poverty through the share of income to meet energy needs.	[4]
Energy poverty inequality	Mean net income	The changes of mean net income among households reveals the effect of the pandemic to households’ income.	[4]

.

To assess the impact of the COVID-19 pandemic on energy poverty among different EU countries, the selected indicators before and during the first year of the pandemic are analyzed. In order to analyze as up-to-date information as possible, gas and electricity prices are compared over a two-year period. Although the EU is a single region with common energy policy goals, such as renewable energy development, the decrease of GHG emissions, improvements in energy efficiency and the strengthening of energy security, the economic and energy situations of the countries differ. Moreover, the geographical situation of each country has a significant impact on the energy expenditures of households. In order to highlight the regional differences among the EU member states, the countries were divided into five regions according to the country’s geographical and economic situation. These regions are: Nordic Europe (Denmark, Finland and Sweden), Nord-East Europe (Czech Republic, Estonia, Latvia, Lithuania, Poland and Slovenia), southeast Europe (Bulgaria, Hungary, Romania and Slovakia), southern Europe (Croatia, Cyprus, Greece, Italy, Malta, Portugal and Spain) and western Europe (Austria, Belgium, France, Germany, Ireland, Luxembourg and The Netherlands).

4. An Overview of Energy Poverty in Europe

Despite that the EU is a single region with the common goals for economic, social, environmental and energy policies, the national achievements of each EU member state differ. The differences between countries are related to geographical, historical, resource, social and other aspects. Therefore, the different policy objectives of the EU are determined for each member state according to its current situation and ability to achieve them. Accordingly, it is reasonable to analyze the energy poverty situation in Europe by dividing the countries according to their level of the economic development and geographical location in the region. This section provides the EU policy measures to combat against the energy poverty of households, with the analysis of selected indicators reflecting the change of energy poverty after the first year of the pandemic, and a review of national policy measures to fight against energy poverty in the context of energy crisis.

4.1. The EU Policy Measures to Fight against Energy Poverty

The alleviation of energy poverty among European households is one of the main EU energy policy priorities. Although, it should be emphasized that the proper attention to this problem rose only in the last decade. The statistics show that buildings are the biggest energy consumer in European countries, as they are responsible for 36% of the energy-related GHG emissions and consume 40% of the energy in the EU. Nevertheless, approximately 75% of the buildings are inefficient and old (over 50 years) in the EU and the renovation rate is only 1% per year [32]. In order to the improve energy efficiency of buildings, the EU released the Energy Performance of Buildings Directive (2010/31/EU) [33] and the Energy Efficiency Directive (2012/27/EU) [34]. The application of principles of energy performance in national building codes allowed for twice the reduction of the energy consumption of buildings. Following the introduction of energy performance rules in national building codes, today buildings consume half the energy compared to buildings in the 1980s.

The fight against energy poverty is reflected in the Clean Energy for all Europeans Package [35], where the need to improve energy efficiency is stressed. The European Commission highlighted the necessity to reduce energy poverty or the risk to face it as a key pillar towards the implementation of the Green Deal ambitions [36]. After the European Green Deal followed the amendment of the Energy Performance of Buildings Directive (2010/31/EU) and the Energy Efficiency Directive (2012/27/EU). The new Energy Performance of Buildings Directive (2018/844/EU) [37] stressed the importance of technological improvements for the construction sector and the necessity to increase the building renovation rate. The new Energy Efficiency Directive (2018/2002) [38] upgraded the policy framework to 2030 and set up the target of energy efficiency for at least 32.5%. The establishment of the Renovation Wave strategy [39] was introduced as a key document to drive energy efficiency and increase energy affordability among households in member states. The document proposes measures, regulatory and financing schemes to boost building renovation. The strategy seeks to double annual renovation rates in the next decade. The renovation of old and inefficient buildings will allow to reduce GHG emissions, increase the quality of life of households, reduce energy bills and also create jobs in the construction sector. In addition, other effects related to the decrease of energy consumption can be identified, such as a possible reduction in energy dependence on imported energy, the increase in energy security, etc.

In the second half of 2021, the world was hit by an energy crisis. Energy prices have started to rise sharply. In October 2021, the European Commission presented a toolbox of measures for the EU member states to support addressing the negative impact of the pandemic on energy prices and to shield households and businesses from rising energy prices and energy poverty [40]. The measures are categorized in two terms: the immediate response and the medium response. According to the European Commission [40], the priority should be given to those measures which quickly and effectively mitigate the price spikes for the most vulnerable groups of people. Moreover, it was emphasized that the measures applied should be easily adjusted, and the interference into market dynamics should be avoided. Moreover, the transition to the low-carbon economy cannot be slowed down by applied measures. The immediate response includes such measures as: direct support to the low-income households through tax reduction, vouchers, the covering of a part of energy bills, a disconnection ban for the energy grid, temporary payments deferral and the introduction of new renewable energy support schemes. In the medium period, the measures are focused on an increase in energy efficiency and the decrease of dependency on fossil fuels. These medium term measures have been pillars of the EU energy policy for many years.

Moreover, energy prices in Europe rose very sharply immediately after the Russian invasion of Ukraine on 24 February 2022. In response, the European Commission on 8 March 2022 published a communication on how to achieve Europe’s energy independence from Russian fossil fuels before 2030 [41]. The document outlines measures for how to address the higher energy prices and analyzed the issues related to energy security. The resilience of the EU energy system will be based on two pillars. First of all, the diversification of natural gas suppliers (liquefied natural gas terminals, import from non-Russian gas suppliers, development of biomethane and renewable hydrogen production) should be implemented. Secondly, faster renewable energy development, the reduction of the use of fossil fuels and the increase in energy efficiency should be implemented in each member state.

4.2. Diversity of Energy Poverty in Europe in Terms of Different Indicators

Data before and after the first years of the pandemic are analyzed to assess the impact of the pandemic on the energy poverty of households (except for energy prices, which are analyzed before and after the second year of the pandemic). Despite the challenges faced by the energy sector, the ability to heat homes adequately continued to show an improvement in many countries (Figure 2). However, a very clear exception is Germany, where the inability to heat homes rose by 260% (from 2.5% to 9%). The significant percentage increases were also found in Luxembourg, Spain, Sweden and Slovenia. A small increase was also found in France, Belgium, Romania, Denmark and Estonia. Meanwhile, many other countries did not have such significant price volatility, and the indicator continued to decline steadily as in previous periods. Nevertheless, the EU-27 average has increased for the first time since 2012, and this increase is significant (from 6.9% to 8.2%), representing almost 19% growth. Such a sharp rise in the indicator signals the necessity to find measures to reduce energy prices.

A clear decline of people living in houses with leakages was observed in northeastern countries (Figure 3). Contrary to northeastern countries, the indicator rose in all Nordic countries. Moreover, a significant increase was found in France, Ireland, Spain and Cyprus. The EU-27 average increased for the first time from 2013 (more than 10% and counts 14% of the EU population).

There has also been an increase in arrears to utility bills for the first time in EU-27 since 2013 (from 6.2% to 6.3%). Arrears growth was mainly in the west, southeast and Nordic countries (Figure 4). Exceptionally high percentage changes were observed in Spain, Germany, Austria, Luxembourg and Denmark. Meanwhile, a significant decline was observed in the northwestern group (except for the Czech Republic).

Figures below show the changes of mean net income in the period of 2019–2020 in euros (Figure 5) and in the purchasing power standard (Figure 6). Household incomes in euros have risen in all countries except France. The highest net income growth was in the northeastern, southeastern and southern countries. The biggest increase was found in Lithuania, reaching 13.34%. The analysis of income according to the purchasing power standard showed a decrease in income in all Nord group countries and even four countries of the western countries. The small increases in household income in euros and the decrease in revenue according to the purchasing power standard are the main reasons for the changes of the EU-SILC indicators presented earlier. The analysis of the first years of the pandemic already shows the impact on household income and confirms the statements raised after the analysis of the scientific literature (Figure 1). It can be assumed that the consequences of the pandemic will become even more pronounced in the following periods.

Figure 7 presents distribution of countries by the inability to keep homes adequately warm and the income. The point of intersection of the axes is the EU-27 average. Western countries have the highest income rate and a lower rate of inability to heat homes than the EU average. Northeastern countries can be characterized as lower than the EU average income, but also lower than average level of the inability to heat houses (except Lithuania).

Changes in energy prices were measured over a two-year period. Rising electricity prices rose in many countries (Figure 8). More than ten percent points of electricity price increase were found in Poland, Romania and Luxembourg. Moreover, a significant decrease in electricity prices was observed in The Netherlands, Latvia, Sweden, Cyprus and Hungary. At the same time, gas prices had fallen in almost all countries (Figure 9). The most favorable changes for consumers were in the northeastern countries. Significant natural gas price declines were also seen in the southeast group countries. The analysis of statistical data confirms that the decline in household disposable income, rising energy prices and energy supply difficulties have increased the share of income of energy consumers to pay energy bills. Thus, the research confirms the hypothesis raised after the scientific literature review, that the pandemic increased the energy poverty among European households.

However, it must be emphasized that in the second half of 2021, electricity and gas prices began to rise sharply in Europe. The situation was caused by the global energy crisis. The rise in prices was also affected by rising tensions between Russia and Ukraine. In the end of 2021, the search for measures to reduce energy prices and support energy consumers was actively initiated at both the European and national level. The Russian invasion of Ukraine has exacerbated the energy crisis in Europe. Energy prices rose sharply in very few days. This economic uncertainty has led Europe to take active actions to diversify energy resources in Europe and reduce import dependency.

4.3. National Policy Measures to Fight Energy Poverty in the Context of the COVID-19 Pandemic

The consequences of the COVID-19 pandemic to the energy sector and the disposable income of people have prompted national governments to create and apply various measures to shield energy consumers from rising prices and energy deprivation. The legal framework of the EU allows its member countries to take actions to address the negative effects of the pandemic and energy price fluctuations. This subsection overviews the national policy measures by countries to combat the wholesale energy price spikes and energy poverty in the context of the COVID-19 pandemic and the global economic uncertainty. The most applied measures among the EU countries are the temporary and targeted reduction of energy taxes and duties, state aid through vouchers or subsidies for energy consumers (especially the most vulnerable) and protection to avoid disconnection from the energy grid.

Table 2. National policy measures for households by countries *.

Group	Countries	Temporary Payments Deferral	Vouchers, Subsidies or Discount on Bills	Disconnection Ban for Energy Grid	Tariff Adjustments, Retail or Wholesale Price Regulation	Tax (VAT) Reduction	Profit Regulation	Other
South Europe	Croatia		+		+	+
	Cyprus				+	+		+
	Greece		+		+	+		+
	Italy	+	+	+	+	+	+	+
	Malta				+
	Portugal		+	+	+	+		+
	Spain		+	+	+	+	+	+
West Europe	Austria		+	+	+			+
	Belgium		+	+	+	+		+
	France	+	+	+	+		+	+
	Germany	+	+	+	+	+	+
	Ireland	+	+	+		+		+
	Luxembourg				+			+
	The Netherlands		+	+	+	+
Nord-East Europe	Czech Republic	+		+		+		+
	Estonia					+		+
	Latvia		+		+
	Lithuania	+	+		+	+		+
	Poland	+	+	+	+	+
	Slovakia	+
	Slovenia		+		+			+
South-East Europe	Bulgaria	+			+		+
	Hungary			+	+
	Romania		+		+	+	+
Nordic Europe	Denmark		+
	Finland						+
	Sweden		+

* “+” means, that the measure is applied. Note: Due to the rapidly changing situation and the immediate decisions to reflect the situation under economic uncertainty, some measures may not be included due to unavailability of English documents. Source: prepared according to [42,43,44] and different national media sources and documents.

presents the summary of policy measures to support households to deal with rising energy prices and to combat energy poverty.

In order to affect the end price for energy consumers, such measures as tariff adjustments, retail or wholesale price regulations were applied in many countries. For example, in Belgium, a social tariff was introduced, and green certificates were replaced by excise duties. In the end of 2021, the government of Bulgaria announced a price freeze for electricity and heating until the end of March 2022. A temporary electricity price cap was introduced in the end of 2021 and 2022 in France. A levy on the wholesale electricity price was reduced in Germany from the beginning of 2022. Heating price caps are to be applied from 2022 in Greece. Energy prices for households are regulated in Hungary. A tax rebate of 30% for heat and electricity was introduced for Irish households. A lot of different tariff adjustments were established in Italy for households and industry consumers. The costs for electricity distribution network services, the difference between natural gas tariffs for consumption above 221 kWh per month and the difference between tariffs in municipalities with extreme high heating tariffs were covered by the Latvian government for the first four months of 2022. The fees in electricity prices were reduced in Luxemburg. The Spanish government cut VAT, excise duties and generation taxes on electricity. Moreover, a gas price cap and a guarantee of a minimum electricity supply for low disposable income households were introduced. A temporary reduction of excise duties for fuel, gas and heating and waived electricity network fees were implemented in Slovenia.

Another of the mostly applied measures is vouchers to energy users, especially the most vulnerable. For example, in the end of January 2022, the government of Austria announced a one-off energy cost compensation for households. The households will receive 150 EUR, while the most vulnerable households will receive compensation of 300 EUR. Belgium introduced 80 EUR energy voucher for the most vulnerable people and 100 EUR voucher for all electricity consumers, with the money deduced from their energy bills. Denmark established a tax-free voucher of about 504 EUR for the vulnerable households living in an area with gas-based district heating or having individual gas-based heating systems. The 100 EUR energy voucher for around 38 million people (earning less than 2000 EUR/month net) was established in France. Differentiated subsidies depending on the extent of electricity consumed and group of households were established in Greece. Moreover, subsidies of 20 EUR/MhW for households using natural gas were established in 2022. The 100 EUR voucher for all electricity consumers and a one-off check of 125 EUR on fuels were established in Ireland. The voucher from 15 EUR to 20 EUR each month for the most vulnerable households to pay electricity bills was established in Latvia to the end 2022. The voucher of 195 EUR for three winter months was established in Sweden to support the households who consume more than 2000 kWh electricity per month. A one-off voucher for 150 EUR or 200 EUR for vulnerable groups of energy consumers was established in Slovenia. The vulnerable energy consumers in Croatia get a 27 EUR voucher to pay their electricity bills. Moreover, a 54 EUR voucher was introduced for gas expenditures.

Moreover, VAT subsidies for energy were established in many countries (e.g., Greece, Lithuania, Cyprus, Romania, Germany, Ireland, Croatia, Italy, Poland, etc.). Poland stands out among the countries that have applied VAT corrections, reducing VAT on gas, food and fertilizers to 0%, on heating to 5% and on diesel and petrol to 8%. These corrections were established for the first six months of 2022. Moreover, in 2021, Poland reduced the VAT on electricity from 23% to 5% and waived the excise duty.

Some countries applied subsidies or a discount on energy bills. Cyprus established a 10% discount on energy bills for all energy consumers and has significantly reduced the VAT on energy bills for the most vulnerable people. The discount on electricity prices for low-income consumers and the discount on network fees for all consumers were applied in Estonia. A 10 cent subsidy for fuel was established in Portugal.

Many countries have already established and successfully applied several measures to support energy consumers coping with electricity and gas price spikes. A good example can be seen in Belgium. The social energy tariff was applied in Belgium during the pandemic for low-income households, targeting nearly half a million citizens. Belgium also supported people which were not eligible to receive the social tariffs and established a fund for gas and electricity. Certain taxes were corrected to compensate the price increase and a VAT reduction from March 2022 to July 2022 was established. Moreover, other measures were implemented, such as a disconnection ban, price freeze and energy voucher for the most vulnerable people. Moreover, another one-off voucher of 100 EUR on electricity bills to all households to the end of 2022 was established. This set of measures protects the most vulnerable energy consumers, does not distort the market and allows to inhibit increasing energy poverty among low-income households.

Some of the measures taken by the countries also can help to achieve long-term strategic energy policy goals. Such measures are related to the development of renewable energy and the improvement of the energy efficiency of buildings and technologies. Austria froze the mandatory renewable electricity contributions for 2022. The surcharge for renewable energy was reduced by more than 40% in Germany. Czech Republic presented a temporary measure for two months at the end of 2021 related to the benefits of renewable energy, where people using renewable energy were dismissed from energy fees. Subsidies for the improvement of the energy performance of buildings were established in Romania. The investments in renewable energy were increased in many countries (e.g., Greece, Lithuania, Denmark, etc.), e.g., support of the replacement of individual gas heating systems was applied in Lithuania and Denmark.

Other measures have also been applied, such as: temporary payment deferrals and disconnection bans were applied in many countries; the government of Lithuania delayed the electricity market liberalization process for six months; a temporary reduction of 20% in public transport fees was applied in Ireland; to protect the most vulnerable households from rising prices, the cost-of-living allowance was increased by 200 EUR in Luxemburg; the social bonus to the most vulnerable households was increased significantly in Spain.

It should be noted that although the countries apply many different measures, mostly they are temporary and can only be used for a limited time. It is therefore necessary to focus on the search and selection of measures that will not only mitigate the effects of increased prices, but also have long-term results. Such long-term measures must be aimed at increasing energy independence at the national and household level through the renewable energy development and high-energy performance in buildings and consumption.

5. Conclusions

The analysis of the recent research analyzing the impact of the COVID-19 pandemic to the energy sector allowed to identify the consequences of the COVID-19 pandemic to the energy poverty of households. In summary, it can be stated that the pandemic affected the energy demand of households, energy prices, investments in new renewable energy projects and caused energy supply difficulties that affects the energy price for final energy consumers and the increased expenditures on energy. In addition to all this, it also affected households’ economic stability and the disposable income of people. As a consequence, the share of income to pay energy bills increased.

A set of three groups of indicators reflecting the extent of energy poverty in different EU countries has been developed. To highlight regional differences among the EU member state countries, they were divided into five regions according to the country’s geographical and economic situation.

Although the increased energy bills affect all energy consumers, the most affected are low-income households, who have to spend a large share of their income to meet their energy needs. After the first year of the pandemic, the share of population unable to heat their homes adequately increased by almost 19% (from 6.9% to 8.2%). It should be noted that from 2012, this indicator tended to decrease every year. Moreover, the extent of this indicator varied among countries during the first year analyzed, and the possible real effect can be measured in the future studies by not forgetting to take into account the current global energy crisis following the Russian invasion of Ukraine.

The increase in electricity and gas prices are observed in all EU countries in 2022. The degree and linkages between wholesale and retail prices in countries depends on the structure and regulation of retail prices and energy mix of each country. In order to help people deal with rising energy bills, various measures were applied among the member states. Mostly, EU countries applied temporary and targeted reductions of energy taxes and duties, provided state aid trough vouchers or subsidies for energy consumers (especially the most vulnerable) and offered a disconnection ban. Although the European Commission provides recommendations and guidelines on how to tackle rising energy prices, the measures to be taken are adopted at the level of each member state. As a result, both the measures taken and the extent to which they are applied vary widely among countries. Measures taken by some countries are even distorting the market, for example the VAT reduction in Poland. Therefore, the recommendations should be more specific and some of them should be implemented at the level of all EU member countries.

Dependence on Russian gas and oil has shown its price to EU countries. Many member states are not prepared to stop the import of energy resources from Russia. Uncompleted homework, such as the purchase of liquefied natural gas terminals, the diversification of energy sources and the sufficient development of renewable energy has pushed many countries “into the corner”. Therefore, the immediate reaction of the countries and active actions are needed at the moment to solve the problem of energy shortages and the dependence on energy resources from Russia in the context of Russian invasion of Ukraine on 24 February 2022.

It is essential that each EU member state pursue the goals of diversifying energy sources, increasing energy security and energy efficiency. The development of renewable energy and energy storage technologies, the improvement in energy efficiency with new technologies and energy efficiency measures (renovation wave) can reduce energy poverty among households significantly. It also will have many other effects on the energy security of the whole region and in each country. The investments in low-carbon energy solutions will help to reduce the volatility of energy prices and the imbalances in energy demand and supply by fluctuations in global fossil fuel prices, and other factors such as sanctions for Russia or other possible external factors.

However, further efforts at the EU level and at the national level are needed to reduce the energy burden on consumers, especially households. In order to achieve the main goals of the energy policy for the whole region, part of the measures should be adopted on a regional basis, e.g., measures to support renewable energy technologies.

The current study has limitations, as the research period due to data availability is short and cannot fully reflect the nature of the problem. A future longer-term analysis is necessary to provide more in-depth analysis. Europe’s transition from imported fuels and its possible impact on energy poverty also requires detailed research.