RWTH Study Explores Relief Measures: Analyzing Strategies for Effective Assistance
The RWTH Chair of Energy System Economics has examined the effectiveness and cost-benefit ratio of the federal government’s relief packages. A large part of the additional energy-related burden can be compensated for by the measures – however, only 14.8 percent of the total relief volume goes to low-income households.
In order to cushion the consequences of increased consumer prices, the German federal government has so far passed three relief packages. At the Chair of Energy System Economics at RWTH Aachen University, Professor Aaron Praktiknjo and Jan Priesmann have examined in detail the financial relief effects for different income groups as well as the cost-benefit ratio of the relief packages.
The study comes to the conclusion that a large part of the energy-related price increases in 2022 and 2023 will be compensated for by the federal government’s measures. According to the authors’ calculations, an average four-person household that gets heat from a gas heater had to calculate additional expenses of around 1,400 euros for 2022 compared to 2021. The various relief measures provide these households with an additional income of an average of 1,200 euros. The results already take into account declines in demand due to increased prices. For 2023, the energy price-related burden will decrease slightly compared to 2022.
The study also shows that the federal government’s measures significantly relieve the burden on households of all income groups. This means that households with very high incomes also benefit from the relief measures.
Only a small portion of the relief volume reaches households affected by poverty
Low-income households are more at risk of poverty than before due to increased energy prices. Given limited public resources, the authors therefore examined the cost-benefit ratio of the measures with regard to poverty reduction. To this end, the study examines the proportion of relief that explicitly addresses households below the at-risk-of-poverty threshold. It turns out that very few of the individual measures focus on households in poverty. If you also weight the measures according to their financial relief volume, the results are even worse.
According to the study results, this can be seen for all three relief packages. For the years 2022 and 2023, there will be an overall relief impact on the financial budgets of private households of a total of 79.9 billion euros, which will be divided into the three relief packages. Of this, 11.8 billion euros, or just 14.8 percent, will benefit households below the at-risk-of-poverty threshold. For comparison: In 2021, 16.9 percent of all households in Germany were affected by poverty.
Jan Priesmann, research assistant at the chair, advises that future measures should “focus on relief that is as targeted as possible, in particular to reduce the risk of poverty.” The main focus should be on targeted transfer payments. If energy costs are persistently high in the long term and go beyond a short-term price shock, these can be accompanied by wage adjustments and adjustments to benefits. Aaron Praktiknjo, holder of the Chair of Energy System Economics, states: “For this purpose, structures should be set up in Germany that enable such targeted addressing.” He also points out another result of the study: “As in other studies, we also find this again.