People experiencing poverty and disadvantage are usually the first and hardest hit by the impacts of climate change and the most impacted if the transition to a clean energy is poorly managed.
Our energy system is in transition driven mainly by the need to reduce carbon pollution from burning fossil fuels that causes climate change. People experiencing poverty and disadvantage are usually the first and hardest hit by the impacts of climate change, they have the least capacity to cope, adapt and recover, so tackling climate change is critical. But they are also the most impacted if the transition to a clean energy is poorly managed.
Unfortunately efforts to provide access to affordable, secure, clean energy – dubbed the energy trilemma – are failing. Electricity prices have increased 114% over the last decade, carbon pollution in the energy sector is rising, and there are serious concerns about power blackouts occurring during the heat of summer in Victoria and South Australia.
People on low-income are bearing the brunt of the energy crisis. Despite being an essential service, more than 160,000 households are disconnected every year. More people are entering hardship programs, and many more are forced to ration energy, forgoing heating or cooling, food and other essentials to pay their energy bills. The latest ACOSS figures identify 3 million people, including over 731,000 children, already living in poverty in Australia.
The number of people struggling with energy stress is likely to be much higher. It’s not only the price of electricity that causes energy poverty, it’s also the size of the bill and a household’s capacity to pay. Factors such as energy efficiency of your home, whether you rent, your level of income, access to concessions, medical needs, size of household, and other financial stressors such as housing costs, all contribute to create energy stress.
Delivering affordable clean energy will require solutions across the whole supply chain, and government leadership recognising that people cannot be left behind. Many of the recommendations from the Finkel Review on the future national electricity market will start to put the right frameworks in place to better manage the transition and the trilemma. More is needed.
An emissions reduction mechanism in line with Paris [climate change] Agreement, is still needed to provide clear guidance to business on what new energy to invest in and by when. This should help reduce carbon pollution and bring wholesale electricity prices down. Schemes to support the transition to clean energy for people on low incomes should be embedded in government budgets rather than smeared across electricity bills.
Policies and measures are needed to support low-income and disadvantaged household’s access solar and ensure the electricity grid remains affordable for those that can’t. Ongoing reform of retail sector practices, including regulating a no-frills low cost electricity product, Improve comparability to support meaningful choice, ending pay on time discounts that are defacto late fees. And to deal with the 114% rise in electricity prices over the last decade, there needs to be adequate income support, including an immediate increase in Newstart benchmarked to essential costs of living.
Improving energy efficiency of households will help reduce bills and also improve health and wellbeing. Minimum energy efficiency standards for rental properties and programs to support energy efficiency upgrades are priorities. Other reforms will also be necessary across climate, energy and social policy.
Moving forward, if we want to ensure we have a more equal society and mitigate climate change, we must place people on low incomes front and centre as we transition into a clean, secure and affordable energy market.
For more information read Empowering Disadvantaged Households to access affordable, clean energy.