Scandinavian Working Papers in Economics

Working Papers,
Copenhagen Business School, Department of Economics

No 12-2021: Alleviating Energy Poverty in Europe: Front-runners and Laggards

Ana Rodríguez-Álvarez (), Manuel Llorca () and Tooraj Jamasb ()
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Ana Rodríguez-Álvarez: Oviedo Efficiency Group, Department of Economics, University of Oviedo, Spain
Manuel Llorca: Department of Economics, Copenhagen Business School, Postal: Copenhagen Business School, Copenhagen School of Energy Infrastructure (CSEI), Department of Economics, Porcelaenshaven 16 A. 1. floor, DK-2000 Frederiksberg, Denmark
Tooraj Jamasb: Department of Economics, Copenhagen Business School, Postal: Copenhagen Business School, Copenhagen School of Energy Infrastructure (CSEI), Department of Economics, Porcelaenshaven 16 A. 1. floor, DK-2000 Frederiksberg, Denmark

Abstract: In recent years, awareness of energy poverty has gained increasing attention in European countries. Comparative country studies can enhance our understanding of the causes and effects of this growing problem. This paper proposes a new model for the analysis of energy poverty. We define a theoretical framework and model to estimate an energy poverty frontier. The estimated frontier indicates the minimum level of energy poverty that a country can achieve given its income level, energy prices, and other country-specific features. We apply the approach to a sample of 30 European countries during the period 2005-2018. This allows us to contrast whether policy measures aimed at reducing the poverty among vulnerable individuals and households have been effective. The estimates indicate that financial aid aimed at especially vulnerable groups, reductions in energy prices, and improvements in energy efficiency seem to be beneficial to face energy poverty. The impact of these factors may partly explain why, despite the negative impact of the financial crisis, we have found a steady and general energy poverty reduction during the period in almost all the countries analysed.

Keywords: Energy poverty in Europe; Energy poverty determinants; Social protection; Stochastic frontier analysis

JEL-codes: C23; H53; I32; Q43; Q48

28 pages, July 13, 2021

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