Tackling Energy Poverty

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Tackling energy poverty

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Harnessing community to implement energy efficiency policies

Nowadays, cities and local governments are the best institutions to define and implement integrative public policies. Nation-States neither have the means of action nor the will to innovate for the most of them. And the actual worldwide political turmoil makes it difficult to articulate the challenges we face on ecological, economical, and societal issues.

This paper aims to join the dots of what is possible to do now to develop local strategies and empower innovative actors as they try to crank up a new paradigm. The levers of action in local governments hands embraces the point of view that a local politician and day-to-day actions can create change.

1) Acknowledging the problem of fuel poverty.

As a politician of a Local Government, I deal with the implementation of public policies to tackle climate change and to reduce energy consumption in my territory. At the same time, I must acknowledge social inequalities and economic deprivation. In the residential sector, one of the top emitting sectors, some households cannot cope with energy bills, due to several factors:

  • Non energy-efficient housing.
  • Non energy-efficient heating system.
  • Soaring housing prices (buy & rent).
  • Soaring energy prices (production, distribution, local taxes).
  • Too low wages.

This is what defines energy poverty. The answer has to deal with financial weaknesses and characteristics of the people the policies are for. A strong and highly-efficient refurbishment might not by financially and technically feasible all at once! Moreover, most of the households having to face cold during winter are tenants, and so do not have the main means of action in their hands.

For now, most local public policies are meant to:

  • Focus on highly-efficient dwellings strategies.
  • Propose loans with monthly repayments of several hundreds of dollars/euros.
  • Secure solvent households in order to boost the market for highly energy-efficient refurbishment where private initiative is failing: banks are not yet equipped with such financial tools, articulating technical advice and economic tool.

It is rational and necessary to have such a target for a public policy based on public funds to seek to reduce the most effectively the greenhouse gases exhaust with programs targeted at the highest energy consumption reduction. However, I propose public policy to tackle energy poverty by developing a program that joins technical advice and financial tools at an amount affordable for the low-income households, such as 50 $/€ a month.

The program aims to pair microloans with technical advice, to realize household improvements with loans of holistic articulation for 3,000 to 4, 000 $/€.

Here are three easy and immediate household fixes:

  • New efficient heating: getting infrared emissions, based on radiant heating systems, are the only way to get worthy warmth.
  • Windows upgrades: repairing tiles, adding curtains, polycarbonate panels.
  • Ventilation improvements: drying the air to make it easier to heat.
  • That would improve the whole well-being of dwellers and home warmth.

The main question is now, how to finance this program? For tenants, a deal could be set that reduce the rent of the same monthly amount of pay back for the microloan, guaranteed somehow by the municipality. But for sure, local governments have to set inclusive financial tools easy to access and the technical objectives and advices aimed specifically for the poor. At the same time, mobilize and support mediation programs between landlords and tenants.

2) Renewable energy markets regulation and support

The Local Governments we run can set objectives for 2050 and take action now to support local renewables energies actors. Still, advocating for some locally empowering energy market regulation is highly needed:

  • Worldwide in 2015, 20% of the total energy consumption was from renewables, and 25% of the electricity production. That leaves a long way to achieve the 100% in most countries.
  • Up to quite recently, feed-in-tariffs have been the usual way to secure investments and appeal to solvent investors. Their goal is to offer long-term contracts with guaranteed and clear energy prices, compensating the up-to-now higher production facilities costs. Those contracts are called “Purchase Power Agreements” or “PPA”.
  • The upcoming question is based on the grid parity tipping-point, when renewables ‘costs will schematically be the same as fossil fuels ones. Feed-in-tariff will by then be obsolete and energy storing facilities be the “countercyclical buffer” on a swing producer market. That is where the value will come and should be tapped from.

As local economies facilitators, local governments should aim at not only increase the share of renewables but also ask themselves how to empower and support local societal stake-holders, meaning socially and ecologically responsible economic actors. The public sector cannot endorse and provide all the economic activity, but should channel developments to the most ecologically and socially fair opportunities.

For example, community-based investments, leveraging savings as a way to finance privately-run public policy, through public-private partnerships, could be supported through dedicated and exclusive feed-in-tariff for both production and storage. This echoes a bottom-up logic based on energy cooperatives.

Investors could mutualize part of the incomes and revenues they get from scheduled energy sells as a community-asset, secured only for them as socially-responsible organizations through socially responsible PPA, securing more revenues than plain ones.

The other part of revenues being used to restore through years the capital they invested. The investors basically secure their savings by embedding them as solar panels, but immobilizing their capital for several years, interests-free on an individual basis.

The community-asset could be used as a “guarantee fund” for microloans dedicated to poor households in the community to thermicaly improve their home. The bulk of the grants relying on feed-in-tariffs are then community-shared and financially fuels the local energy-saving actions program. Solvent households do not take private advantage of a system paid either by the tax payer or each energy consumers.

Such a pattern helps harnessing renewables development to the day-to-day improvement of housing, improving at the very same time the decrease of the reliance on fossil fuels, the efficiency of energy-use in stock-housing and at the first place, social justice. Without relying on public funding, but to start the financial scheme.

Note: such community-based solar renewables production and storage cooperatives is not to be seen as a silver-bullet or a one size-fits-it-all, but as one of the possible development scheme, have to work as an ecosystem with other patterns (industrial scale development, market player development etc.…).

3) Governance and bottom-up action

One of the main levers of action we do have as heads of local institutions is the setting of the budget and the fiscal steering wheel it relies on. Here are some samples of what could be done, or targeted if it also requires advocate campaign to nationwide regulations:

  • Setting a tax on the best solar-orientated industrial roofs, tax-relief if it is opened to community-based projects.
  • Tax-relief for landlords getting a deal with their tenants for a microloan (rent reduced and then frozen for 3 years).
  • Having the new condo to invest in renewables to relief the grids.
  • Grid-use-tax relief only for community-based projects increase for the industrial ones.
  • Social grants by the end of the loan repayment.
  • Skill-up and training of local small businesses to the new approach of refurbishment.

However, local governments also have the responsibility to foster local markets not only by their own policies but by supporting local actors. The community-based organizations involved in renewables could also work with a network of small local green businesses and financial institutions for both activities:

  • Solar panels installation and maintenance;
  • “Holistic” housing improvement, toping at 4 000 $/€.

It helps having perennial, cause diversified, green activities and helps to have a contra-cycling effect of boom-and-bust economic phenomenon: balance can be made between those two sets of activities.

Further research has to be done regarding the legal and financial possibility to set such cooperatives. Dots remain to be joined though, and several projects already try this out. For example, the Gowanus micro-grid project TransActive Grid, in Brooklyn, New York City, make the link within the community between photo-voltaic panels investors and poor households coping with paying the energy bills.

With such a scheme, wealthy households could pay on a blockchain based exchange for the cost of managing the microloan for the local financial institution. Or to further help by reducing the numbers of months having to be repaid.

Conclusion

Considering the context of restricted access to public funds, it is essentials that public policies let the private initiatives flourish through witted and systemic regulation of housing refurbishment, financial tools and renewable energy markets. Health of people will also be improved, with collateral positive effect, putting people on a positive feedback loop.

A further step would be to consider that the guarantee fund could have a second use: to secure the launch of local and complementary currency. But this will have to be dealt with by another politician, I cannot set everything on my own and we have to work as a team!


guillaume-jolyBy Guillaume Joly

I’m a Local Public Policies designer focused on urban sustainability and energy transition. I rely on an integrative approach and implementation of those public policies to deal with environmental protection, health of beneficiaries, economic development, societal and cultural changes all at the same time. I am also very interested in monetary matters, such as local currencies. This requires systemic innovations on energy grids governance, renewable energy marketing, efficient housing refurbishment and green building, social equity and a non-binary and nonlinear way of thinking is thus useful, both for Ecology and LGBT issues.

Read his CV here. 

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