How can we alleviate transport poverty? Insights from a cluster analysis for Spain

Addressing transport poverty in the context of rising energy prices is increasingly relevant, given the fundamental role that transportation plays in facilitating access to basic needs and rights. Identifying and characterising transport-poor households is crucial to developing targeted policies and compensation schemes. During the 2022 energy crisis, where such data was not available, many countries decided to implement large universal fuel subsidies. These measures, which were widely criticized by environmental NGOs and institutions such as the IMF and OECD as ineffective and costly, underscore the urgency of finding alternative policy designs. This paper addresses this shortcoming, using the Low-Income-High-Cost (LIHC) transport poverty indicator and hierarchical cluster analysis to identify and analyse six profiles of transport-poor households in Spain. We assess whether a universal discount of 20 cents per litre of fuel, a policy in place in Spain during 2022 and similar in many other countries, could be replaced by more targeted measures. Our results show that targeted interventions based on this type of cluster analysis could significantly reduce transport poverty levels more effectively and economically than universal subsidies, resulting in a just energy transition.