Support measures for Austrian households in the energy crisis: an analysis of social effectiveness and implications for energy efficiency

Abstract

During the energy crisis, low- and lower-middle-income households were hit hardest by the surges in energy prices, since they needed to allocate a considerably larger share of their income towards heating fuels and electricity than higher-income households. This short communication summarises the results of a structured analysis of the support measures to reduce the negative impacts of the energy crisis on households implemented in Austria along two criteria derived from the literature: social effectiveness, i.e. the degree to which they are targeted to vulnerable households, and energy efficiency incentives. The support measures implemented in Austria have generally lacked (social) targeting. Broad compensation measures tend to impede price signals that incentivise energy savings and entail higher fiscal costs. In the medium and long run, these measures, like tax reductions, price caps or untargeted lump-sum payments, should therefore be replaced by measures focussing on income support for the most vulnerable households. This would enable a more effective use of resources, improve social effectiveness, and contribute to increasing energy efficiency.