Who has been affected most by the energy crisis in Spain?
New data reveals that different groups have been disproportionately impacted by the energy crisis in Spain, and that some groups have done better than others when it comes to government subsidies.
The ongoing energy crisis in Spain does not affect all Spaniards equally, according to a new study.
Data from the Observatorio de la Transición Energética y la Acción Climática (OTEA) has revealed that the energy crisis, triggered by Russia's invasion of Ukraine in 2022, has disproportionately affected rural communities, the self-employed and childless couples.
READ ALSO: The places in Spain where people are paying the most for electricity
The raft of government measures to try and combat this, including offering discounts on fuel and cutting VAT on gas bills, has primarily benefited large families and the unemployed.
In general terms, the report found that households where the head is unemployed, large families, and households where the main breadwinner has a low level of education were the groups that benefited the most from government subsidies, something the OTEA highlighted as having an "important effect" and described as largely, but not entirely, progressive.
Cutting bills
These are some of the conclusions of the OTEA'S 'Analysis of the distributive impact of the measures to contain household energy bills' study co-financed by Iberdrola and Spain's Ministry of Science.
"The measures analysed have been useful in containing inflation and sustaining household incomes in the short term," the study reported.
It found that the price of energy in Spain rose by 29 percent in 2022 compared to the previous year, and that, crucially, without state intervention, it would have risen by 44 percent. The average bill was €2,952 compared to the €3,292 that the average household would have paid without the government's measures, and was "notably lower" for lower-income and vulnerable households.
READ ALSO - UPDATE: How Spain's new energy measures can help you
Average households paid 29 percent more, while vulnerable and severely vulnerable households benefiting from the 'bono social' paid 16 percent and 4 percent respectively. "The measures mean that for the lowest 10 percent of households, the bill is reduced by 2.5 percent of their income, while for the highest 10 percent of households, the reduction is 0.8 percent," the study concluded.
The 'bono', as it's known in Spanish, reduces electricity bills by up to 65 percent and provides an annual payment for heating costs.
Energy consumption
However, according to the study, not only did certain groups benefit more from government aid, but some groups were generally less affected by the energy crisis such as the elderly who live alone and people who live in urban areas, not only because they consume less energy but also because they are less likely to drive and therefore spend less on petrol.
The hardest hit groups have been the rural population, which in the report are considered people living in municipalities with less than 10,000 inhabitants, the lower-middle class, as well as the self-employed and households where the main breadwinner has a low level of education.
In terms of rural residents more specifically, the impact of the energy crisis is felt two-fold: having a vehicle is more necessary, so they spent more on fuel, and it is usually more expensive to heat a rural house, which increases their energy consumption.
READ ALSO: At what time of the day is electricity cheapest in Spain?
Women were found to be less affected than men by price rises, as well as benefiting more from state subsidies. The groups that benefitted least from the subsidies are the elderly living alone, households in urban areas and people with higher education, the former because they are less dependent on cars and therefore fuel, and the latter because they are more likely to have a higher income.
The distributional impact is also explained by energy consumption levels according to each type of household. Low-income households spend a higher proportion of their income on electricity and heating while higher-income households have no problem spending more on fuel. For this reason, the OTEA report found that generally speaking, the raft of government measures put in place to combat the energy crisis has been progressive on the whole.
Benefiting the rich?
But not entirely. Though in most cases OTEA'S report found that the government aid has been effective in helping those who need it most, there were some regressive elements to the measures.
It concluded that some of the aid did partially leave out the middle classes who, though reasonably well off, have also felt the effects of the crisis, and in some cases measures have actually benefited the wealthy.
It was the highest earners in Spain, according to the study, that benefited the most from the discount on fuel, the government measure that the OTEA evaluated as the worst because it was not means tested and was available to the entire Spanish population.
READ ALSO - APPROVED: Spain reduces VAT on gas bills
Cuts on VAT, something the government implemented on gas and electricity bills was also found to be somewhat regressive. "Given that energy expenditure increases with income and a significant part of the measures have been of a general [non-means tested] nature, the benefits in absolute terms increase with income," the report said.
Recommendations
As well as reporting their findings, the OTEA also made a series of recommendations to the Spanish government to better distribute aid given out to combat the energy crisis. Calls for "designing mechanisms that allow aid to be quickly focused on vulnerable groups," should be a priority, it said, and also include "low-medium-income" people in the most affected groups.
Spain's Ministry of Ecological Transition is to introduce income criterion for large families in order to be eligible for state aid on electricity and heating bills, though the proposals are still under study. In its conclusions, the OTEA supports this idea and states that "logically, access to the social voucher has to be based on income criteria".
OTEA also suggested that the government introduce and analyse indicators for "transport-associated poverty" and "identify households vulnerable to transport".
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The ongoing energy crisis in Spain does not affect all Spaniards equally, according to a new study.
Data from the Observatorio de la Transición Energética y la Acción Climática (OTEA) has revealed that the energy crisis, triggered by Russia's invasion of Ukraine in 2022, has disproportionately affected rural communities, the self-employed and childless couples.
READ ALSO: The places in Spain where people are paying the most for electricity
The raft of government measures to try and combat this, including offering discounts on fuel and cutting VAT on gas bills, has primarily benefited large families and the unemployed.
In general terms, the report found that households where the head is unemployed, large families, and households where the main breadwinner has a low level of education were the groups that benefited the most from government subsidies, something the OTEA highlighted as having an "important effect" and described as largely, but not entirely, progressive.
Cutting bills
These are some of the conclusions of the OTEA'S 'Analysis of the distributive impact of the measures to contain household energy bills' study co-financed by Iberdrola and Spain's Ministry of Science.
"The measures analysed have been useful in containing inflation and sustaining household incomes in the short term," the study reported.
It found that the price of energy in Spain rose by 29 percent in 2022 compared to the previous year, and that, crucially, without state intervention, it would have risen by 44 percent. The average bill was €2,952 compared to the €3,292 that the average household would have paid without the government's measures, and was "notably lower" for lower-income and vulnerable households.
READ ALSO - UPDATE: How Spain's new energy measures can help you
Average households paid 29 percent more, while vulnerable and severely vulnerable households benefiting from the 'bono social' paid 16 percent and 4 percent respectively. "The measures mean that for the lowest 10 percent of households, the bill is reduced by 2.5 percent of their income, while for the highest 10 percent of households, the reduction is 0.8 percent," the study concluded.
The 'bono', as it's known in Spanish, reduces electricity bills by up to 65 percent and provides an annual payment for heating costs.
Energy consumption
However, according to the study, not only did certain groups benefit more from government aid, but some groups were generally less affected by the energy crisis such as the elderly who live alone and people who live in urban areas, not only because they consume less energy but also because they are less likely to drive and therefore spend less on petrol.
The hardest hit groups have been the rural population, which in the report are considered people living in municipalities with less than 10,000 inhabitants, the lower-middle class, as well as the self-employed and households where the main breadwinner has a low level of education.
In terms of rural residents more specifically, the impact of the energy crisis is felt two-fold: having a vehicle is more necessary, so they spent more on fuel, and it is usually more expensive to heat a rural house, which increases their energy consumption.
READ ALSO: At what time of the day is electricity cheapest in Spain?
Women were found to be less affected than men by price rises, as well as benefiting more from state subsidies. The groups that benefitted least from the subsidies are the elderly living alone, households in urban areas and people with higher education, the former because they are less dependent on cars and therefore fuel, and the latter because they are more likely to have a higher income.
The distributional impact is also explained by energy consumption levels according to each type of household. Low-income households spend a higher proportion of their income on electricity and heating while higher-income households have no problem spending more on fuel. For this reason, the OTEA report found that generally speaking, the raft of government measures put in place to combat the energy crisis has been progressive on the whole.
Benefiting the rich?
But not entirely. Though in most cases OTEA'S report found that the government aid has been effective in helping those who need it most, there were some regressive elements to the measures.
It concluded that some of the aid did partially leave out the middle classes who, though reasonably well off, have also felt the effects of the crisis, and in some cases measures have actually benefited the wealthy.
It was the highest earners in Spain, according to the study, that benefited the most from the discount on fuel, the government measure that the OTEA evaluated as the worst because it was not means tested and was available to the entire Spanish population.
READ ALSO - APPROVED: Spain reduces VAT on gas bills
Cuts on VAT, something the government implemented on gas and electricity bills was also found to be somewhat regressive. "Given that energy expenditure increases with income and a significant part of the measures have been of a general [non-means tested] nature, the benefits in absolute terms increase with income," the report said.
Recommendations
As well as reporting their findings, the OTEA also made a series of recommendations to the Spanish government to better distribute aid given out to combat the energy crisis. Calls for "designing mechanisms that allow aid to be quickly focused on vulnerable groups," should be a priority, it said, and also include "low-medium-income" people in the most affected groups.
Spain's Ministry of Ecological Transition is to introduce income criterion for large families in order to be eligible for state aid on electricity and heating bills, though the proposals are still under study. In its conclusions, the OTEA supports this idea and states that "logically, access to the social voucher has to be based on income criteria".
OTEA also suggested that the government introduce and analyse indicators for "transport-associated poverty" and "identify households vulnerable to transport".
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