Fuel poverty policy: Go big or go home insulation

Abstract

Using the Residential Energy Consumption Survey (RECS) data for 2005 and 2015, we quantify key factors contributing to fuel poverty dimensions in the United States. Our results suggest some differences in explanations for two key fuel-poverty dimensions of unaffordability and inadequacy. Explanatory variables with positive associations with the unaffordability aspect include binary variables for renting and vulnerability signalled by prior receipt of energy assistance. Education and dwelling insulation are negatively associated with unaffordability aspects of fuel poverty. Solar panels might also be beneficial in this context. Insulation and prior receipt of energy assistance have consistent associations across both the unaffordability and inadequacy aspects of fuel poverty. We find no evidence of an association of renting or education with the inadequacy aspect of fuel poverty, in contrast to the case for the unaffordability aspect. Our results suggest that a policy providing small-scale assistance is not likely to substantially improve fuel poverty outcomes. However, a greater focus on home insulation and other big investments such as solar panels could be a more effective and transformative policy alternative.