The impact of the Bono Social de Electricidad on energy poverty in Spain
Introduction
Spain has the fourth-highest incidence of winter deaths related to energy poverty in Europe (EU Energy Poverty Observatory, 2019). The Spanish Government has attempted to reduce energy poverty by the creation of the Bono Social de Electricidad (BSE) in 2009. The subsidy consists of a discount for electricity prices for retirees, households in which all members are unemployed, and large families. However, the levels of energy poverty are still rising ten years after the implementation of the subsidy. In this paper, we analyze the impact of the BSE.
We use difference-in-differences (DiD) taking households eligible for the subsidy as our treatment group. We test the robustness of the estimates with propensity score matching, controlling for heterogeneity between eligible and ineligible households. We use three indexes of energy poverty: the ability to keep your house warm, delays in electricity bills, and the presence of damp walls, leaking roofs and rotting windows.
Most of the literature on energy poverty has focused on its measurement, rather than on policy evaluation as we do here. There are few papers on the BSE, focused on identifying who is a potential beneficiary (e.g., Gabiola et al., 2016). This reflects the broader literature on energy poverty, which is mostly about measuring its extent rather than the impact of policies to reduce energy poverty. This paper fills this gap in the literature and provides a more in-depth understanding of an important topic in Spain. The BSE was established in 2009. Therefore, we focus on the period from 2008 to 2011. The subsidy is still in place, albeit with changed requirements, so that our results inform future reforms of the BSE or alternative policies to alleviate energy poverty.
The paper is structured as follows. Section 2 discusses the origins and details of the BSE. Section 3 reviews the literature regarding energy poverty and the Bono Social de Electricidad. In Section 4, we present the data and its limitations. Section 5 details the empirical strategy. Section 6 presents the results. Section 7 concludes.
Section snippets
The Bono Social de Electricidad
Concerns about energy poverty emerged in the UK after the energy crisis of 1973 (Sanchez-Guevara, 2015). Three root causes were identified: low income, low energy efficiency housing, and the price of energy. The UK was also the first European country, in 1997, to implement policies to alleviate energy poverty, such as Winter Fuel Payments. Spain lagged behind.
The European Union (EU) urged its Members to act on energy poverty in 2009 (European Commission, 2009), protecting “vulnerable
Literature review
Since the 2008 Financial Crisis, the literature on energy poverty in the European Union (EU) member states has grown considerably. Higher electricity prices, greater unemployment and falling wages have led to a rise of energy poverty. There is no internationally agreed definition of what energy poverty means. Bouzarovski et al. (2012) define energy poverty as “a household experienc[ing] an inadequate level of energy services in their home”. The United Kingdom used to use an expenditure-based
Data sources
Data on household and individual characteristics, including energy poverty subjective variables, is taken from the Living Standards Household Surveys, which are harmonized across different European Union member states. The “Encuesta de Condiciones de Vida” (ECV) is published every year by the National Institute of Statistics (INE). Each household participates for four years in the survey, in a rotating panel.
We analyze those households who were surveyed before and after the BSE was implemented
Empirical strategy
In order to analyze the impact of the BSE on energy poverty, we use a linear difference-in-differences model (DiD) and propensity score matching (PSM).
Difference-in-differences
Table 3 shows regression results for each outcome variable with and without controls. Without control variables, the BSE only has a statistically significant impact on delays in electricity bills. On average and ceteris paribus, being eligible for the BSE increases by 1.7 percentage points the probability of suffering from delays in electricity bills. For the other two outcome variables, the results show no significant effect of the subsidy on the ability to keep your house warm and the
Conclusion and policy implications
A reform of the subsidy is needed. It is not clear that the change in the criteria in 2017 is enough to correct an ineffective policy, despite that it means better targeting of the vulnerable consumers. Structural problems such as energy-inefficient buildings are not likely to be tackled by an income transfer. 23.55% of Spanish households suffer energy poverty. A country with high average temperatures appears unprepared for cold weather. Some vulnerable groups of the society are likely to
Funding
None.
Declaration of interest
None.
References (23)
- et al.
Counting energy poverty in Spain between 2004 and 2015
- et al.
Energy poverty policies in the EU: a critical perspective
- et al.
Measuring energy poverty: focusing on what matters
Renew. Sustain. Energy Rev.
(2012) - et al.
Measuring energy poverty in Greece
- et al.
Fuel poverty in the UK: Is there a difference between rural and urban areas?
Energy Policy
(2015) Resumen Anual Climatológico
- et al.
The energy divide: integrating energy transitions, regional inequalities and poverty trends in the European Union
Eur. Urban Reg. Stud.
(2017) Boletín Mensual de Indicadores Eléctricos y Económicos
Cuando los hijos y los nietos comen gracias a la pensión del abuelo: la bomba generacional del sur de Europa
(2014)Indicators & Data