The anti-inflation shield or an energy voucher: how to compensate poor households for rising energy prices?

Jakub Sokolowski, Jan Frankowski and Joanna Mazurkiewicz

No 05/2021, IBS Policy Papers from Instytut Badan Strukturalnych

Abstract: The geopolitical situation and the EU's ambitious climate policy are driving energy prices up. And when these rise, they inflate the risk of poverty and inequality – especially among poorer households. These risks should be mitigated and energy-poor households compensated for the increase in energy prices. The Anti-inflation Shield proposed by the Polish government in November 2021 will not do this; it is merely a temporary cut in energy prices that will potentially benefit high-income households the most. Energy vouchers are an alternative that would effectively work to reduce poverty, inequality and contribute to achieving climate policy goals. These vouchers should: (1) go to energy-poor households, (2) cover their average energy expenditure, (3) encourage households to enroll in energy transition support programmes. And while this solution is expensive, its benefits far outweigh its costs. Poor households must be compensated for rising energy costs to foster greater public acceptance of a cleaner and greener energy transformation.

Keywords: energy and climate (search for similar items in EconPapers)
Pages: 12 pages
Date: 2021-12
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:ibt:ppaper:pp052021

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