Energy poverty in Seoul: Current status and the effect of government supports

Abstract

We estimate the current status of energy poverty in Seoul and examine the effect of policy measures on alleviating energy poverty. One of the main findings is that 2.4 % of the total households in Seoul are suffering from energy poverty based on the 2M indicator (twice the median ratio of energy expenditure to household income). The hidden energy poverty measured as the share of low-income households whose energy expenditure is less than a half of the median expenditure of national households is 2.7 %, which is similar to the proportion of households who respond that they have experienced a lack of energy services during summer or winter or the health effects from energy poverty (2.8∼3.2 %). We find that government supports are useful for alleviating energy poverty from various evaluation methods. The share of low-income households suffering from energy poverty decreases by 1.2∼2.7 % points due to government supports. Government supports help low-income households to reduce energy expenditure by 32.1 %∼38.7 % on average. A reduction in energy expenditure by 1000 Korean won ($0.86) a month due to government supports reduces the probability that low-income households fall in energy poverty by 25.5∼33.4 %, which is far more effective than income redistribution policies to raise household income.