Do you ever imagine that the subsidy of renewable energy might be related to social inequality? According to a recent study from Portland State University (PSU) in the US, in some countries, the increase of fossil fuel tax might worsen the costs of people's electricity or fuel, leading to more energy poverty.
Energy poverty means that a household's expense of power, heating, and cooling exceed 10% of its total income.
Energy poverty is a unique phenomenon of poverty. Energy poverty households are not necessarily households with low-income. Among the households who are experiencing energy poverty, some are low-income and some aren't. However, low-income households lack sufficient social resources, so their energy costs might erode their budgets for education, food, medicine and socializing. Taken to the extreme, their quality of life might be negatively affected.
In the PSU study, in the sample of 175 nations from 1990 to 2014, most of the countries use renewable energy to replace gasoline and coal, and to eventually stop fossil fuel pollution and reduce the influence of climate changes. These measurements indeed reduced CO2 emissions per capita, but they worsened national income inequality and energy poverty.
How did this happen? According to the PSU study, it might be related to policies and social welfare. Julius McGee, an assistant professor of sociology in PSU's College of Liberal Arts and Sciences, said that in the United States, a typical method to promote renewable energy is to offer tax subsidy. This measure reduces the costs of solar panel installation or energy-saving appliance installation.
However, the subsidy doesn't make up for the total increased costs of renewable energy to utility companies. In order to make up for the money losses, utility companies have raised bills for the rest of the customers.
In other words, for households who didn't install energy saving devices or renewable energy equipment, and for low-income households who cannot afford these devices, their costs of energy increased. Indirectly, energy poverty and social inequality were worsened.
Power and air conditioners are not just necessary for daily life. For the people who are struggling to make ends meet, their rising energy costs will force them to choose between food and energy, stated McGee.
Despite its problems, this research does not ask people to put an end to energy transition. Rather, it points to how governments can change social welfare within the context of the transition--for example, how they can offer subsidies for power bills and fuel expenses to low-income households, or provide incentives for them to buy energy saving appliances. An example of how these measures can be implemented can be seen in Europe. In some European countries, the government will prohibit landlords from driving out tenants during winters, and provide social housing. After all, the energy bills are highly related to the insulation quality of residential buildings or to the energy efficiency of appliances.
In the future, when the electricity market is liberalized, governments might need to come up with related strategies to secure the quality of life for low-income households.
In some countries, renewable energy is used to alleviate energy poverty. Researches showed that in Southeast Asia or Africa, one giant solar farm can offer low-priced electricity for those who never had electricity.
McGee pointed out that to have electricity is a basic human right. When solving climate change issues, energy poverty issue must be considered as well.
This research team's study is published in the journal of Energy Research & Social Science.