News / Insights

The following paper by the Bank of Italy addresses the issue of energy poverty—that is, the difficulty in affording essential energy products—within the European Union, proposing an alternative approach based on household expenditure data.

The document criticizes the indicator most commonly used at the European level—namely, the percentage of the population reporting an inability to adequately heat their homes (EU-SILC). Although harmonized and widely used, this indicator has several shortcomings: it is subjective, does not allow for precise comparisons between countries, and tends to underestimate the extent of the phenomenon. To overcome these limitations, the authors propose an alternative approach based on objective expenditure data collected through the EU Household Budget Survey (HBS), a harmonized survey covering 24 Member States for the years 2010, 2015, and 2020. In particular, the paper applies a modified version of the Low Income High Cost (M_LIHC) indicator, already adopted in Italy, which identifies economically vulnerable households with high energy expenses relative to their spending capacity. The analysis highlights significant heterogeneity among countries. In 2020, approximately 11.7% of households in the 16 Member States were in a state of energy poverty, with peaks exceeding 30% in Bulgaria, Finland, and Malta. France, Germany, and Spain consistently show levels above the EU average, while Italy remains steadily below it. Particularly significant is the share of so-called “hidden” energy poverty—that is, households with zero or very low heating costs, often excluded from conventional indicators: in countries such as Spain and France, they account for about one-fifth of the population. The paper concludes with an important observation: the quality and harmonization of data at the European level are still too weak to allow for systematic comparisons between countries and the development of a shared and reliable European indicator. The study shows that existing tools—such as the EU-HBS—can already provide a more solid foundation for policies to combat energy vulnerability. The Italian case, where the gap between subjective and objective indicators—with a perception of hardship higher than spending data—is particularly marked, demonstrates how important it is to adopt an approach capable of capturing the various facets of the phenomenon and making it visible even when it is hidden within seemingly “normal” consumption thresholds.