German govt should combat energy poverty with targeted support for low-income households – report

To efficiently advance the energy transition and alleviate energy poverty, Germany's government should provide close to 17 billion euros over the next two years in targeted support for low-income households, a report compiled by consultancy Institute for Applied Ecology (Öko-Institut) and commissioned by consumer organisation VZBV concluded. Specifically supporting low-income households with financing for insulation, window replacement or a switch to a heating system powered by renewable sources would increase energy efficiency and renewable energy use. This would be a particularly efficient way to prepare these households for the coming winter if energy prices remain high, the authors said. "The energy price crisis has placed a heavy burden on many consumers, and the situation has worsened for low-income households in particular," vzbv's Thomas Engelke said. "The government must make targeted investments in the coming years to alleviate energy poverty in Germany on the way to more climate protection."

With 17 billion euros, households would be compensated for 80 percent of the necessary investment costs. The Öko-Institut calculated that the resulting energy cost savings would amount to 20 billion euros over the lifetime of the measure. The proposed public investment could reduce energy demand by 9.5 terawatt hours (TWh) and save 2.6 million tonnes of greenhouse gas emissions, the authors said.

Russia's war on Ukraine and the ensuing energy crisis placed a particularly high burden on low-income households. In 2022, 5.5 million people in Germany said they felt financially unable to keep their home adequately warm. The German government introduced several measures to prevent spiralling energy costs at the height of the crisis, such as gas and electricity price caps for all households, regardless of needs or income. These are set to run out at the end of 2023, due to the budget crisis in Germany.