Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/322004 
Year of Publication: 
2025
Series/Report no.: 
DIW Discussion Papers No. 2119
Publisher: 
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
Abstract: 
The energy crisis following Russia's invasion of Ukraine exposed the heightened vulnerability of low-income households to rising heating costs, particularly those in energy inefficient buildings. Using data from the German Socio-Economic Panel (SOEP), this study examines the distributional impact of heating costs across income deciles and evaluates the effectiveness of policy interventions. We find that low-income tenants are the most vulnerable segment of the population, with elevated risks of energy poverty. While carbon pricing with landlordtenant cost splitting shields low-income households from carbon costs, it fails to offset overall energy price increases. In contrast, a "Worst-First" retrofit strategy, prioritizing upgrades in the least efficient buildings, substantially reduces heating costs and mitigates energy poverty. Our findings highlight the need for targeted retrofit policies to ensure both equitable decarbonization and economic relief for vulnerable households.
Subjects: 
Distributional effects
energy efficiency
retrofit
carbon prices
energy price crisis
JEL: 
Q41
Q48
D31
D63
Document Type: 
Working Paper

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