Europe's Green Deal: Is the Middle Class Left Behind?

Authors

DOI:

https://doi.org/10.15678/PG.2022.61.3.02

Keywords:

residential energy consumption, human development, Fit for 55, energy poverty

Abstract

Objective: In this paper, we fundamentally question the Fit for 55 starting assumption that reducing household energy consumption is beneficial or even neutral (i.e. not detrimental) for households in all Member States in the short period up to 2030. This article identifies the plight of households unable to improve their well-being without increasing the consumption of fossil fuels. Tackling energy poverty and addressing social inequality issues is a cornerstone. Around 35 million people live in energy poverty in the European Union (European Commission, 2023), and tens of millions more are at high risk of energy poverty. However, ensuring the well-being of EU citizens requires a broader awareness of the implications of reducing fossil fuel use.

Research Design and Methods: The research methodology relies on a range of quantitative methods: Gini coefficient, Hoover index, Decomposition adjusted Hoover index, rank correlation coefficient, path analysis, and decoupling factors are presented. We also analyze from different perspectives highlighting inequalities and the direct and indirect relationship between residential energy use and HDI and decoupling.

Findings: Based on projected policy impacts, consumers will need to pay more for using fossil fuels. Higher energy taxes will likely impact middle-class families who are not the EU’s Climate Fund targets. Based on our previous projections, at least the bottom two-thirds of the middle class (which roughly represents the 2nd, 3rd, and 4th quintiles) also need support. There is a risk that in countries where HDI and per capita household energy use are still tightly connected, the growth in household energy use (driven mainly by higher incomes and increasing human welfare) will be strongly constrained by higher energy costs. In the EU energy convergence will slow down, or even stop, so that the current spatial disparities in HDI and in residential energy use will persist.

Implications: Decreasing the differences in HDI and residential energy use is necessary to achieve social and economic convergence and reduce the inequalities in living standards across the EU Member States. Changes in household energy use in the EU have both direct and indirect impacts on HDI; any increase or decrease in energy use will be immediately reflected in human well-being.

Contribution/Value Added: This article highlighted those countries most exposed to a reduction in well-being. Member States below the saturation point are at a much higher risk of negative impacts of residential energy use on human development. Tackling energy poverty is a very important issue, but in this case, at least the bottom two-thirds of the middle class (which roughly represents the 2nd, 3rd, 4th quintiles) also need support. This could include preferential loans, grants, and technical assistance to enable them to make the necessary energy efficiency improvements and deep renovations that will bring real energy savings.

Downloads

Download data is not yet available.

Author Biographies

  • Michael Carnegie LaBelle, Central European University

    PhD, associate professor, Department of Environmental Sciences and Policy

  • Tekla Szép, University of Miskolc

    PhD, associate professor, Institute of World and Regional Economics, Faculty of Economics

References

Akizu-Gardoki, O., Bueno, G., Wiedmann, T., Lopez-Guede, J. M., Arto, I., Hernandez, P., & Moran, D. (2018). Decoupling between human development and energy con-sumption within footprint accounts. Journal of Cleaner Production, 202, 1145–1157. https://doi.org/10.1016/j.jclepro.2018.08.235

Arthur Cox LLP. (2022). Energy Transition: One year on from Fit for 55, REPowerEU signals further significant reform. Arthur Cox LLP. https://acmainweb.azurewebsites.net/knowledge/energy-transition-one-year-on-from-fit-for-55-repowereu-signals-further-significant-reform/

Arto, I., Capellán-Pérez, I., Lago, R., Bueno, G., & Bermejo, R. (2016). The energy re-quirements of a developed world. Energy for Sustainable Development, 33, 1–13. https://doi.org/10.1016/j.esd.2016.04.001

Assadzadeh, A., & Nategh, H. (2015). The relationship between per capita electricity con-sumption and human development indices. In Proceedings of 6thIASTEM Interna-tional Conference (pp. 1–7). Available at: https://www.worldresearchlibrary.org/up_proc/pdf/117-144870270051-57.pdf (accessed: 15.09.2022).

Béres-Virág, Á., & Vinogradov, S. (2018). Territorial disparities in Hungarian tourism 2003–2013. Studia Mundi – Economica, 5(3), 91–101. https://doi.org/10.18531/Studia.Mundi.2018.05.03.91-101

Brecha, R. J. (2019). Threshold Electricity Consumption Enables Multiple Sustainable Development Goals. Sustainability, 11(18), Article 18. https://doi.org/10.3390/su11185047

Dias, R. A., Mattos, C. R., & P. Balestieri, J. A. (2006). The limits of human development and the use of energy and natural resources. Energy Policy, 34(9), 1026–1031. https://doi.org/10.1016/j.enpol.2004.09.008

Dutta, S., Lanvin, B., & Wunsch-Vincent, S. (Eds.). (2018). The Global Innovation Index 2018: Energizing the World with Innovation. World Intellectual Property Organization.

European Climate Foundation, & Cambridge Econometrics. (2021, May 25). Exploring the trade-offs in different paths to reduce transport and heating emissions in Europe. Transport & Environment. Available at: https://www.transportenvironment.org/discover/exploring-the-trade-offs-in-different-paths-to-reduce-transport-and-heating-emissions-in-europe/ (accessed: 16.10.2022).

European Commission. (2021a). A European Green Deal [Text]. Available at: https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal_en (accessed: 10.10.2022).

European Commission. (2021b). Public consultation on the revised Climate, Energy and Environmental Aid Guidelines (CEEAG)20. Available at: https://ec.europa.eu/competition-policy/public-consultations/2021-ceeag_hu (accessed: 10.10.2022).

Eurostat. (2021). Database—Eurostat. Available at: https://ec.europa.eu/eurostat/data/database (accessed: 11.10.2022).

Eurostat. (2022). Database—Eurostat. Available at: https://ec.europa.eu/eurostat/data/database (accessed: 11.10.2022).

Gaye, A. (2007). Access to Energy and Human Development. Human Development Report 25.

IEECP. (2022). A Socially-Just EU Renovation Wave. Recommendations for EU Policymakers Based on Findings in 10 Member States. (27 pp.). Institute for European Energy and Climate Policy (IEECP).

Jacmart, M. C., Arditi, M., & Arditi, I. (1979). The world distribution of commercial energy consumption. Energy Policy, 7(3), 199–207. https://doi.org/10.1016/0301-4215(79)90063-6

Jacobson, A., Milman, A. D., & Kammen, D. M. (2005). Letting the (energy) Gini out of the bottle: Lorenz curves of cumulative electricity consumption and Gini coefficients as metrics of energy distribution and equity. Energy Policy, 33(14), 1825–1832. https://doi.org/10.1016/j.enpol.2004.02.017

Jorgenson, A. K., Alekseyko, A., & Giedraitis, V. (2014). Energy consumption, human well-being and economic development in central and eastern European nations: A cautionary tale of sustainability. Energy Policy, 66, 419–427. https://doi.org/10.1016/j.enpol.2013.11.020

Kanagawa, M., & Nakata, T. (2008). Assessment of access to electricity and the socio-economic impacts in rural areas of developing countries. Energy Policy, 36(6), 2016–2029. https://doi.org/10.1016/j.enpol.2008.01.041

Krugmann, H., & Goldemberg, J. (1983). The energy cost of satisfying basic human needs. Technological Forecasting and Social Change, 24(1), 45–60. https://doi.org/10.1016/0040-1625(83)90062-8

Kurmayer, N. J. (2022, December 18). EU approves CO2 tax on heating and transport, softened by new social climate fund. Www.Euractiv.Com. Available at: https://www.euractiv.com/section/emissions-tradingscheme/news/eu-agrees-co2-tax-on-heating-and-transport-fuels-softened-by-new-social-climate-fund/ (accessed: 12.10.2022).

LaBelle, Michael. 2009. “Expanding Opportunities: Strategic Buying of Utilities in New EU Member States.” Energy Policy 37 (11): 4672–78. https://doi.org/doi: DOI: 10.1016/j.enpol.2009.06.022.

LaBelle, M. C. (2020). Energy Cultures. Technology, Justice, and Geopolitics in Eastern Europe. Edward Elgar Publishing. Available at: https://www.e-elgar.com/shop/gbp/energy-cultures-9781788975759.html (accessed: 12.10.2022).

LaBelle, M. C., & Georgiev, A. (2016). The Socio-Political Capture of Utilities: The expense of low energy prices in Bulgaria and Hungary (p. 21). Available at: https://erranet.org/download/socio-politicalcapture-of-utilities-bulgaria-hungary/ (accessed: 10.10.2022).

LaBelle, M. C., Tóth, G., & Szép, T. (2022). Not Fit for 55: Prioritising Human Well-Being in Residential Energy Consumption in the European Union. Energies, 15(18), Article 18. https://doi.org/10.3390/en15186687

Leung, C. S., & Meisen, P. (2005). How electricity consumption affects social and economic development by comparing low, medium and high human development countries. Global Energy Network Institute, 12.

Martínez, D. M., & Ebenhack, B. W. (2008). Understanding the role of energy consumption in human development through the use of saturation phenomena. Energy Policy, 36(4), 1430–1435. https://doi.org/10.1016/j.enpol.2007.12.016

Mazur, A. (2011). Does increasing energy or electricity consumption improve quality of life in industrial nations? Energy Policy, 39(5), 2568–2572. https://doi.org/10.1016/j.enpol.2011.02.024

Nadimi, R., & Tokimatsu, K. (2018). Modeling of quality of life in terms of energy and electricity consumption. Applied Energy, 212, 1282–1294. https://doi.org/10.1016/j.apenergy.2018.01.006

Nemes Nagy. (2005). Regionális elemzési módszerek. ELTE Regionális Földrajzi Tanszék, MTA-ELTE Regionális Tudományi Kutatócsoport. Available at: https://www.academia.edu/10307380/REGION%C3%81LIS_ELEMZ%C3%89SI_M%C3%93DSZEREK (accessed: 13.10.2022).

OECD. (2002). Indicators to measure decoupling of environmental pressure from economic growth. Organisation for Economic Co-operation and Development. Available at: http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?doclanguage=en&cote=sg/sd(2002)1/final (accessed: 15.10.2022).

Ouedraogo, N. S. (2013). Energy consumption and human development: Evidence from a panel cointegration and error correction model. Energy, 63, 28–41. https://doi.org/10.1016/j.energy.2013.09.067

Pachauri, S., & Spreng, D. (2004). Energy Use and Energy Access in Relation to Poverty. Economic and Political Weekly, 39(3), 271–278.

Pachauri, S., Urge Vorsatz, D., & LaBelle, M. (2012). Synergies between energy efficiency and energy access policies and strategies. Global Policy, 3(2): 187–197.

Pasten, C., & Santamarina, J. C. (2012). Energy and quality of life. Energy Policy, 49, 468–476. https://doi.org/10.1016/j.enpol.2012.06.051

Pasternak, A. D. (2000). Global energy futures and human development: A framework for analysis. Available at: http://inis.iaea.org/Search/search.aspx?orig_q=RN:33031115 (accessed: 13.10.2022).

Ray, S., Ghosh, B., Bardhan, S., & Bhattacharyya, B. (2016). Studies on the impact of energy quality on human development index. Renewable Energy, 92, 117–126. https://doi.org/10.1016/j.renene.2016.01.061

Ridao-Cano, C., & Bodewig, C. (2018). Growing united: Upgrading Europe’s convergence machine: Overview. World Bank. Available at: https://documents.worldbank.org/en/publication/documents-reports/documentdetail/852701520358672738/Overview (accessed: 13.10.2022).

Steckel, J. C., Missbach, L., Ohlendorf, N., Feindt, S., & Kalkuhl, M. (2022). Effects of the energy price crisis on European households (p. 33). Mercator Research Institute on Global Commons and Climate Change (MCC) GmbH. Available at: https://www.mcc-berlin.net/fileadmin/data/C18_MCC_Publications/2022_MCC_Effects_of_the_energy_price_crisis_on_European_households.pdf (accessed: 15.10.2022).

Steinberger, J. K., & Roberts, J. T. (2009). Across a Moving Threshold: Energy, carbon and the efficiency of meeting global human development needs. Social Ecology Working Paper.

Steinberger, J. K., & Roberts, J. T. (2010). From constraint to sufficiency: The decoupling of energy and carbon from human needs, 1975–2005. Ecological Economics, 70(2), 425–433. https://doi.org/10.1016/j.ecolecon.2010.09.014

Sušnik, J., & Zaag, P. van der. (2017). Correlation and causation between the UN Human Development Index and national and personal wealth and resource exploitation. Economic Research-Ekonomska Istraživanja, 30(1), 1705–1723. https://doi.org/10.1080/1331677X.2017.1383175

Sweidan, O. D., & Alwaked, A. A. (2016). Economic development and the energy intensity of human well-being: Evidence from the GCC countries. Renewable and Sustainable Energy Reviews, 55, 1363–1369. https://doi.org/10.1016/j.rser.2015.06.001

Szép, T., Pálvölgyi, T., & Kármán-Tamus, É. (2023). “Landscape” of energy burden: Role of solid fuels in Central and Eastern European residential heating. International Journal of Sustainable Energy Planning and Management, 37, 61–74. https://doi.org/10.54337/ijsepm.7503

Szép, T., Tóth, G., & LaBelle, M. C. (2022). Farewell to the European Union’s east-west divide: Decoupling energy lifts the well-being of households, 2000–2018. Regional Statistics, 12(3), 159–190. https://doi.org/10.15196/RS120307

Tran, N. V., Tran, Q. V., Do, L. T. T., Dinh, L. H., & Do, H. T. T. (2019). Trade off between environment, energy consumption and human development: Do levels of economic development matter? Energy, 173, 483–493. https://doi.org/10.1016/j.energy.2019.02.042

UNDP. (2020). Human Development Data (1990-2018) | Human Development Reports. Available at: http://hdr.undp.org/en/data (accessed: 09.10.2022).

United Nations. (2015). What is Human Development? In Human Development Reports. United Nations. Available at: https://hdr.undp.org/content/what-human-development (accessed: 10.10.2022).

Urge-Vorsatz, D., Wójcik-Gront, E., & Tirado Herrero, S. (2012). Employment Impacts of a Large-Scale Deep Building Energy Retrofit Programme in Poland. The Hague, Netherlands: European Climate Foundation. https://researchrepository.rmit.edu.au/esploro/outputs/report/Employment-impacts-of-alarge-scale-deep/9921860493001341 (accessed: 11.10.2022).

Vona, F. (2023). Managing the distributional effects of climate policies: A narrow path to a just transition. Ecological Economics, 205, 107689. https://doi.org/10.1016/j.ecolecon.2022.107689

Weiner, C., & Szép, T. (2022). The Hungarian utility cost reduction programme: An impact assessment. Energy Strategy Reviews, 40, 100817. https://doi.org/10.1016/j.esr.2022.100817

World Bank. (2022). World Bank Open Data | Data. Available at: https://data.worldbank.org/ (accessed: 11.10.2022).

Wu, Q., Maslyuk, S., & Clulow, V. (2012). Energy Consumption Inequality and Human Development. Energy Efficiency, 18.

Downloads

Published

2022-12-23 — Updated on 2022-12-31

How to Cite

LaBelle, M. ., & Szép, T. (2022). Europe’s Green Deal: Is the Middle Class Left Behind?. Journal of Public Governance, 61(3), 25-42. https://doi.org/10.15678/PG.2022.61.3.02