As the autumn settles in and the heating goes on, Ireland’s high dependence on imported fossil fuels for the bulk of our heating demand comes into sharp relief once again. This dependence exposes us as a nation to the volatility of gas markets, which of course experienced upheaval after Russia’s invasion of Ukraine in February 2022.
But it’s not just gas. Irish electricity prices are higher than the EU average. The most recent data analysed by the Commission for Regulation of Utilities (CRU) shows that domestic electricity prices in Ireland were the ninth most expensive in Europe, while Irish domestic gas prices were the fifth most expensive in Europe. Although great strides have been made in connecting renewable energy in the form of onshore wind and solar PV to the grid, we still rely on imported gas for a good chunk of our electricity supply. Just 14 per cent of our total energy comes from renewables, with 83 per cent coming from imported fossil fuels. The more clean energy we can generate for ourselves, the less vulnerable we are to price shocks beyond our control.
While economists tend to be more interested in the cost to the economy overall, for the householder, energy costs vary dramatically. It goes without saying that the real cost of energy services depend on the type of house you’re trying to heat, and your income. The “average” home in Ireland consumes 4,200 kWhr annually of electricity. But can you honestly say you know what a kWhr is, and which appliances consume the most energy?
Aside from our poorly insulated housing stock, where anything built before 2005 is likely to have a Ber rating of C or lower, we are not very energy-literate in Ireland. Few people understand how to read energy labels on appliances or even understand their utility bills. It is easy to see why people are suspicious of smart meters when they seem to be yet another opportunity for utilities to bamboozle their customers and extract more profit. While smart metering is supposed to encourage “more informed energy choices” according to the CRU, there are continuing reports of householders having difficulty accessing their data or being offered poor value in terms of time-of-use tariffs.
Energy poverty is a function of both the heating demand of your home and your own income: the better insulated it is and the more efficient the heating source, the lower the cost. But that is a snapshot view of energy poverty: in reality, energy poverty and vulnerability to it builds up over time. For example, it requires capital (usually in the form of savings or loans) to engage in a retrofitting project which may realise savings in the long term. It is not a surprise that most A-rated homes, according to CSO data, are found in the prosperous counties of Kildare, Dublin and Meath.
A rise in income inequality over time will also lead to a rise in energy inequality over time. For people on low incomes struggling to balance budgets and pay bills, it is often not feasible to have long payback periods for home improvements – and that’s if you’re lucky enough to even have a home. If you’re at the mercy of a landlord, poor quality rental accommodation and extortionate rents, you have no choice but to pay more for energy or do without. For people on lower or fixed incomes, doing without often becomes the default option.
The truth is that the poor pay more for energy services of all kinds, not just because of the regressive nature of VAT and energy/carbon taxes, but because it is so much more expensive to invest in energy-efficient appliances, cars, homes and heating systems. The poor pay more in monetary terms, but also in health outcomes and quality of life.
The poor are also much more exposed to inflation, as Social Justice Ireland reported recently: the poorest 10 per cent of households experienced an inflation rate on food and non-alcoholic beverages in 2022 that was almost twice that of the richest 10 per cent. Inflation on rent was three times that of the richest. Inflation in electricity, gas and other fuels was 1½ times higher for poorer households than richer ones. The housing crisis reduces the options for people on low incomes even further.
There is an opportunity cost when you give something to everyone in the audience. What the Government proposes to do by way of another round of winter energy credits is to advantage the better off, and to drive up income and environmental inequality even further.
It would make sense to tackle energy poverty and reduce our reliance on imported fossil energy together. The Government could use its resources to target poorer families most exposed to the cost-of-living crisis with more income supports, while ensuring that the lowest rated Ber buildings in the social and rental housing stock are retrofitted as a national priority.
Sadhbh Ó’ Neill is an environmental and climate researcher
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