Proposing a Novel Minimum Income Standard Approach to Energy Poverty Assessment: A European Case Study

Abstract

Energy deprivation can be identified as a manifestation of general poverty. Indeed, the former should be studied in connection with economic poverty since energy vulnerability is closely linked to a low-income level. To explore this connection, this paper proposes a novel Minimum Income Standard (MIS) approach to energy poverty indicators. In particular, this work applies the reference budgets method to the case of Spain and compares the obtained MIS indicator with one calculated using the Integration Minimum Income (RMI in Spanish) as a threshold. The results of the MIS indicator calculated with different income thresholds were critically analysed to establish a disproportionate expenditure metric based on an absolute income threshold obtained with an objective methodology. The outcomes show that the reference budget MIS indicators are generally higher than those obtained with the RMI, with the latter unable to identify energy poverty amongst certain household typologies. This result, together with the lack of scientific objectivity associated with the RMI, indicates that the reference budget MIS is more accurate when measuring an adequate minimum income. Eventually, this work might contribute to the measurement of (energy) poverty in Spain and the EU and inform policymakers to adequately target assistance programs.