Fuel poverty in New Zealand.

• Author: Lloyd, Bob

Abstract

The concept of fuel poverty emanated from grass roots environmental health movements in the United Kingdom and Ireland in the early 1980s. In recent years it has been taken on board by the British government in as much as they have committed to eradicate it by the middle of this decade. A household is in fuel poverty if it would need to spend more than 10% of the total household income on all household fuels to achieve a satisfactory indoor environment. A satisfactory indoor environment is defined as being at temperatures of at least 21[degrees]C in the living areas and 18[degrees]C in other parts of the house. The number of households in fuel poverty in the United Kingdom has been variously estimated at somewhere between one million and seven million, with a median acknowledged by the government of around three million in 2001. This number would mean some 14% of the population in the United Kingdom were in fuel poverty at that time. The present paper suggests that in New Zealand the number of households in fuel poverty in 2001, using the same definition of adequate indoor temperatures as for the United Kingdom, is very similar, with a range of between 10% and 14% of total households.

BACKGROUND

Fuel poverty is a concept that arose out of grass-roots energy action groups in the United Kingdom and Ireland during the early 1980s. This was a time when the oil price hikes of 1974 and 1979 produced fuel cost increases, which in turn led to large heating bills for residential consumers. The poorer consumers suffered more than others in terms of having to pay a larger percentage of their total income to keep warm.

The first definition of the concept was a fuzzy notion: "The inability to afford adequate warmth in the home", as given by Lewis in a submission for the National Right to Fuel Campaign in Bradford in the United Kingdom (Lewis 1982). Later, Brenda Boardman, in her doctoral thesis and her groundbreaking book on fuel poverty (Boardman 1991), expanded the concept to include the effect of energy-inefficient housing. The idea was roughly that households that would need to spend more than 10% of their income on all household energy fuels in order to achieve a satisfactory indoor heating regime were categorised to be in a state of fuel poverty (Clinch and Healy 2001). The key idea here is that the fuel cost is attributed to what people would need to spend, not what they actually spend.

The early definitions lacked precision in terms of both adequate economic parameters and the thermal parameters. Even today the definition is debated in terms of what constitutes an adequate thermal environment and what constitutes the total household income. Despite the definitional debates, fuel poverty has been taken on board by the British government in their current strategy to combat the health effects associated with cold homes (DEFRA and DTI 2001). The problem in the United Kingdom has been particularly politically sensitive due to historically poor levels of housing quality and their nearness to better-housed and cooler northern neighbours.

Household fuel poverty is currently defined in Britain (DEFRA 2003) as the need to spend more than 10% of annual household income on all household fuel use. The heating fuel component of the household fuel use should be sufficient to enable the home to achieve a satisfactory heating regime (see below). Household energy use excludes transport, lawn mowers, boats and other recreational energy uses not specific to that used within the residential building itself.

The British definition assumes that a satisfactory heating regime is one where the main living area is at 21[degrees]C, with 18[degrees]C in other occupied rooms. It is assumed that heating is available for 16 hours per day for households likely to have occupants home all day, and nine hours per day for households in work or full-time education. It is also assumed that the whole house is heated except where the household is "under-occupied", when it is assumed that half of the house is heated (DEFRA 2003). This characterisation is consistent with the WHO recommendations on adequate indoor temperatures (WHO 1989). Under-occupied, in the British context, implies that the house has more than one unoccupied bedroom.

In Australia, which has a much warmer climate than either the United Kingdom or New Zealand, fuel poverty was investigated in the 1980s and was the subject of a number of research reports, including Fuel Poverty in Victoria (Energy Action Group 2002) and Unequal Access (Blackman et al. 1987). Due to the deregulation of the electricity sector in Australia and rising prices, especially in the more remote areas of the country, the problem has been recently resurrected, with lobby groups again questioning how market deregulation can sit with the provision of social equity (Energy Action Group 2002).

The economic parameters dealing with the British definition of household incomes are difficult to translate internationally, so are best considered in terms of current national definitions. In this context, the household income is the income as reported by Statistics New Zealand from the 2001 census (Statistics New Zealand). Fuel poverty is commonly applied to developed countries and to cool climates that need heating for part (or all) of the year, but it has also been considered in terms of warm climates (cooling energy) and in developing countries with regard to the provision of fuel for cooking. In this paper, the concept is considered in terms of developed countries and for housing in cool climates, with Dunedin as a case study.

In terms of policy initiatives in New Zealand, reducing fuel poverty is consistent with the Ministry of Social Development's aims, as given in their recent Statement of Intent 2005/06 (Ministry of Social Development 2005), among which are to:

... improve the overall wellbeing of New Zealanders. One way in which we do this is to reduce the inequalities experienced by disadvantaged groups. To be successful our work in reducing inequalities must focus on achieving sustainable improvements. (p.19) Households that need to spend more than 10% of their income on fuels to keep warm and to service an adequate lifestyle would be deemed in most developed countries to be disadvantaged. The emphasis on "sustainable improvements" will be examined again at the end of this paper.

Fuel poverty was also discussed in the recent Sustainable Energy policy document produced by the New Zealand Ministry of Economic Development (2004b). Unfortunately this document gives a misleading interpretation of the British definition, because it refers to what New Zealanders actually spend on heating energy, rather than what they would need to spend on all household energy sources to achieve an adequate thermal environment (see earlier definition).

A recent International Energy Agency (IEA) report (Schipper et al. 2000) suggested that:

By 1995 New Zealand had the lowest space heating intensity (measured as energy per square meter per degree day) of all the countries studied, even including Japan and was about half of Australian levels ... It seems unlikely in practice that comfort levels are so low in New Zealand. Possible data problems with wood may partly explain this apparent discrepancy. The data they used are correct and comfort levels are indeed low. Residential energy use in New Zealand for 1995 was around...