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As described in previous chapters, the Nordic countries have initiated the work on energy poverty. Although the ministries, agencies, industry organisations, utility regulators and other stakeholders involved, are awaiting a ready political direction on the implementation of the revised energy efficiency directive, some work has already been done. The initial work has also kick-started some considerations about what future work paths for energy poverty in the Nordics could look like. Future perspectives on energy poverty have been discussed in a virtual workshop where actors from different sectors across the Nordics participated.

In the following sections, perspectives for the implementation of the revised energy efficiency directive in terms of energy poverty are outlined. Specifically, this chapter includes perspectives on:

As described in section 4.3, the revised Energy Efficiency Directive (2023) poses requirements on Member States. This includes a requirement to achieve energy savings for a defined target group including people in energy poverty (EED Art. 8.3). The achieved end-use savings from policy measures directed at these specific groups must match the percentage of households experiencing energy poverty. For example, if “a Member State reports that 10% of its population is in energy poverty, 10% of the cumulative end-use Energy Savings Obligation should be delivered among the defined energy poor groups”

The new 2023 Energy Efficiency Directive - Guidance and recommendations for national planning and implementation. The Coalition for Energy Savings. 2023.

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Box 4 provides three recommendations for implementing the new Energy Efficiency Directive at a national level provided by The Industry Coalition for Energy Savings.

Eventually, the chosen definition of energy poverty has implications for the required delivery of end-use energy savings at the national level. Depending on the percentage of the population included in the target population, a corresponding percentage of the cumulative end-use Energy Savings Obligation

Energy efficiency directive - European Commission (europa.eu)

should be obtained through measures targeting that group. This means that a set of criteria needs to be estab­lished to determine a target group that policy measures can be targeted towards.

Perspectives for the future implementation of the energy efficiency directive were discussed during a workshop with various stakeholders from the Nordic countries as well as representatives from relevant European organs (e.g. DG Ener, EPAH). In this context, it was emphasised by participating actors that the Nordic countries have distinct starting points for implementing the directive as EU Member States are obligated to do so, while third countries are not bound by such commitments. In general, it was emphasised that it is unfamiliar to specify a certain kind of vulnerability in the Nordics. Workshop discussions revealed concerns about potential double subsidising due to existing social support systems. Furthermore, there were concerns raised about the achievability of the energy savings obligation based on national definitions. This is particularly relevant when the defined group of energy poor individuals already consumes a minimal amount of energy. Consequently, it is crucial to identify the purpose of a definition on energy poverty and how it should align with other vulnerabilities to guide appropriate subsidy schemes and communication strategies.

In this section, we delineate the key perspectives integral to the forthcoming implementation, which was highlighted during the workshop discussions, with a particular focus on aspects related to anchoring, data, and reach. However, it is important to emphasise that it is key to formulate a national political decision and wording of the directive's implementation due to its complexity. This complexity makes it challenging to present more specific scenarios at this point.

An initial step in implementing the Energy Efficiency Directive involves defining the directive’s purpose within the context of each country. In this context, it is relevant to consider the impact of upcoming directives, including how they can be aligned, as these will also influence national policies, such as the Electricity Market Directive. During interviews and the workshop, discussions have centred on whether the directive aims to mitigate the impact of rising energy prices for the most vulnerable citizens, whether the directive focuses on enhancing energy efficiency to prevent future shortages or both. Decisions regarding the political intent behind the directive and the subsequent definition of energy poverty will determine the appropriate anchoring ministry or agency (e.g. Ministry of Social Affairs, Ministry of Energy and Supply). The different approaches to grasp energy poverty are visualised in Figure 31.

Some actors assert that the root cause of higher energy prices lies in energy scarcity, emphasizing the need for a more efficient energy supply. Others argue that the energy crisis exposes gaps in their social welfare schemes, prompting the need for a more robust safety net. Additionally, some actors contend that a clear definition of energy poverty would facilitate the identification of citizens that may require greater support for their energy bills in the short-term and/or energy efficiency support in the longer term. These diverse perspectives highlight the varying considerations and political purposes when implementing the directive. This indicates that the first crucial step is to make a political determination of the directive's purpose and subsequently anchor it within the appropriate ministry and agency. Moreover, adequate cross-sectorial collaboration is key, given that certain organisations or units have the best overview of vulnerable groups.

Upon defining the purpose of implementing the directive, the subsequent focus shifts towards identifying an appropriate threshold for energy poverty and estimating the prevalence of energy poverty – be it an affordability or energy efficiency focus – along with relevant indicators and data. When debating which indicators are most suitable to measure energy poverty, different scenarios have been discussed in interviews and in the workshop.

For some actors, it is key to have a Nordic collaboration and to share experiences on the identification of the most cost-effective indicators and variables in order to support a sustainable strategy for the implementation. This collaboration should focus on identifying appropriate indicators that support the understanding of the prevalence and the character of energy poverty, as well as sharing experiences, and on examining operational systems that align with multiple EU directives addressing energy poverty. However, it has been emphasised that quantitative variables present challenges when compared, especially across Europe. Despite the harmonized measurements of EU-SILC, it may not necessarily be the most optimal source due to data availability across countries as well as country-contextual differences like diverse energy sources, geographical and demographical structures, which influence the individual’s opportunities. For this reason, some of the indicators, as suggested by the revised energy efficiency directive, receives some criticism as they might over- or underestimate the severity of energy poverty (see section 4.5 and chapter 5 for a discussion on indicators). Finally, the suggested indicators are based on sample-based survey-data and therefore do not by themselves identify a target population of reachable individuals, which will complicate the subsequent policy implementation.

Several actors advocate for registry-based indicators over subjective ones. The concern is that individual preferences influence the perception of e.g. being adequately warm. Instead, they argue that one must establish a fine-meshed set of indicators based on national data combined with survey data to achieve higher precision. Despite the critique of indicators having a subjective nature, these indicators have also been highlighted as crucial in the work of identifying energy poverty. Subjective measures are acknowledged as important, prompting countries to supplement with quantitative data from national sources. It is argued that qualitative investigations can discover energy poverty that would not have been identified solely by the use of quantitative data. In this regard, it is especially hidden poverty as expressed by the prioritisation and deprivation in households that can be identified. Also, lack of resources to serve advanced technology like a heat pump or to understand guidance and information campaigns can be identified through a qualitative approach.

Triangulation of data and consideration of various indicators and variables are crucial for a comprehensive understanding of the prevalence, the covariance between indicators and general character of energy poverty. Lack of precise data may affect the accuracy of any support programmes. When triangulating data sources, collaboration with energy suppliers can be pivotal to access the data needed. In this regard, utility companies express a concern in relation to GDPR-related matters.

As mentioned, the chosen definition of energy poverty leads to certain energy savings obligations. Consequently, the initial steps of defining the political purpose, anchoring the directive, diagnosing the national level of energy poverty and obtaining the right indicators, must be followed by a practical dimension of reaching the target groups with corresponding policy measures to meet these obligations. Due to these obligations, it has been questioned what definitions the directive incites.

Interviews with Nordic stakeholders and discussions at the virtual workshop highlight the need for frameworks to reach relevant target groups at the right stage in terms of intervention. In other words, how does the identification of energy poverty translate into specific regulation and interventions to make a real difference for the desired target population, and how can authorities communicate with this target group.

Specific examples of measures that might be difficult to communicate to the most relevant target groups are support schemes for heat pumps or energy retrofitting that generally are highly relevant for energy poor households with high energy expenditures due to expensive heating sources or low energy efficiency. However, insights from interviews indicate that it can be difficult for the most vulnerable groups to find and take advantage of these types of initiatives. In addition, economic as well as demographic structures can delimit citizens’ opportunities to take advantage of these initiatives. Although the variables behind these schemes exist, they might not reach nor help the most relevant target groups.

Another example is the disconnections of electricity, where it can be difficult to know whether not paying the bill is an expression of energy poverty, relocation, or something else. This requires the grid companies to have knowledge of end-users or to collaborate with social authorities to be able to properly confirm energy poverty and act accordingly.

To conclude, this suggests that acquiring a comprehensive understanding of effective strategies for the implementation of the directive is crucial to make it a success.