Fuel poverty in Poland and the discrepancies between LIHC and subjective measures

In our first guest article of 2017, Katarzyna Sałach from the Institute for Structural Research in Warsaw presents some key findings from a recently concluded study of fuel poverty in Poland. 

The second year of an intensive study on fuel poverty in Poland, conducted by the Institute for Structural Research (IBS), is just coming to the end. Key findings are made, key numbers are known, and some solutions have been proposed. The problem is worth investigation: high regional variation of living conditions, rooted in the history of Poland, results in the heterogeneity of the fuel poor. The complexity of the phenomenon set a challenge for the researchers, but at the same time forced a more insightful understanding of differences between various indicators of fuel poverty.

According to the LIHC indicator[1], fuel poverty in Poland concerns 9.6% of households (approx. 4.4 million people). They usually live in rural areas (62% of households), in detached houses (65%), they are blue-collar workers (29%), pensioners (21%), or farmers (14%). Their houses have rather large floor areas and their incomes are relatively low – these two factors combined (and some others listed below) result in energy expenditures being an excessive burden on their monthly budgets.

However, a subjective measure of fuel poverty – declared lack of thermal comfort in the place of living in winter[2] – reveals a different picture. The fuel poor according to subjective measure live mainly in cities (66% of households), in blocks of flats (61%), and in old dwellings (42% lives in buildings built before 1946). They are both blue-collar (30%) and other workers (16%), pensioners (27%), and retirees (10%). Apart from relatively low incomes, the key factor related to this dimension of fuel poverty is low energy efficiency of buildings, which in turn is highly correlated with buildings’ age. According to the subjective fuel poverty indicator, the problem concerns 11.5% households (approx. 4.2 million people). Interestingly, the population affected is less numerous than in the case of LIHC fuel poverty, despite higher incidence among households – that’s because households affected by LIHC have on average more members.

The cluster analysis conducted on Polish Household Budget Survey (2014) data allowed us to discover more detailed portraits of the fuel poor. Among 12 types of households that we distinguished in Poland, six were classified as fuel poor. However, only one type was at high risk of both LIHC and subjective fuel poverty. It consists of inhabitants of relatively small, old and poorly insulated detached houses located in rural areas and small cities, who use coal to heat their houses. Although their homes are in need of renovation, their low incomes do not allow for the required investment. Other groups which we identify as fuel poor occupy low standard dwellings in pre-war tenement houses located in ‘neighbourhoods of poverty’ in cities (fuel poor by subjective measure); or are pensioners living in rural areas in houses too big for their needs (LIHC); or comprise of families with many children who occupy big, detached houses in rural areas and have relatively small incomes (LIHC). This last group usually do not declare lack of thermal comfort and do not experience high material deprivation. However, high energy needs, caused to some extent by large floor areas, mean for them limited resources left to meet other basic needs.

The analysis of regional variation of fuel poverty and its causes confirms that LIHC and subjective measures focus on different aspects of fuel poverty in Poland. The variation is substantial – at the voivodships (NUTS2) level, fuel poverty rates range from 6-7% to 17-18%, regardless of the measure. However, except for few voivodships, there is trade-off between both dimensions of fuel poverty: where LIHC fuel poverty rate is high, subjective fuel poverty rate is low, and conversely (Fig. 1, Fig. 2).

Figure 1. LIHC fuel poverty rates in voivodships in Poland in 2014 [%] Source: Own calculations based on Polish HBS data 2014.

Figure 1. LIHC fuel poverty rates in voivodships in Poland in 2014 [%].
Source: Own calculations based on Polish HBS data 2014.

Figure 2. “Lack of thermal comfort” (subjective fuel poverty) rates in voivodships in Poland in 2014 [%]. Source: Own calculations based on Polish HBS data 2014.

Figure 2. “Lack of thermal comfort” (subjective fuel poverty) rates in voivodships in Poland in 2014 [%]. Source: Own calculations based on Polish HBS data 2014.

 

The LIHC indicator shows that regions with the lowest urbanization rate (Eastern Poland) are mostly at risk, whereas subjective indicator points to those regions where buildings are the oldest (Western Poland). The significant spatial variation of fuel poverty stems from differences between regions in the buildings’ characteristics, households’ characteristics (level of income and its source, number of children), and the diverse advancement of urbanisation processes. The variance analysis reveals that all these factors influence both LIHC and subjective dimension of fuel poverty – but to a different extent. Level of household’s disposable income and dwelling’s floor area are the most important causes of LIHC fuel poverty, while building’s characteristics, mainly age, are key factors behind the subjective fuel poverty. This is consistent with the cluster analysis discussed earlier. Low urbanization rate in eastern voivodships is correlated with a significant share of detached houses, which on average have floor areas twice as big as dwellings in blocks of flats. Such types of fuel poor households as large families with children as well as pensioners, both living in detached houses in rural areas and identified by the LIHC measure, largely live in these voivodships. On the other hand, subjective fuel poverty dominates in regions where buildings are the oldest and, therefore, exhibit low energy efficiency, both in rural and urban areas.

Our results stress the complexity of fuel poverty and show limitations of indicators. They present the picture of fuel poverty in Poland, but they also show discrepancies between LIHC and subjective measures that should be taken into account when designing appropriate policies of fuel poverty reduction.

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The research was conducted by the fuel poverty team in IBS – Institute for Structural Research: dr Maciej Lis, Agata Miazga, Katarzyna Sałach, Aleksander Szpor and Konstancja Święcicka.

For recent Working Papers and references please see:

Lis M., Sałach K., Święcicka K. (2016), Heterogeneity of the fuel poor in Poland – quantification and policy implications, IBS Working Paper 08/2016. http://ibs.org.pl/en/publications/heterogeneity-of-the-fuel-poor-in-poland-quantification-and-policy-implications/

Lis M., Miazga A., Sałach K. (2016), Location, location, location. What accounts for regional variation of fuel poverty in Poland?, IBS Working Paper 09/2016. http://ibs.org.pl/en/publications/location-location-location-what-accounts-for-regional-variation-of-fuel-poverty-in-poland/

[1]The LIHC indicator calculated by the Institute for Structural Research is as close to its English precursor as it is possible. However, because of the lack of reliable data on the required energy expenditures, we treat as required the mean expenditures in subgroups defined by the intersection of three categories: type of building (detached, terraced, block of flats), its age and type of heating used. The data come from Polish Households Budget Survey 2014.

[2] As the subjective indicator we treat the answer to the question: “Is your dwelling warm enough in winter in your opinion (functional heating, good thermal insulation of building, etc.)?”.

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