Smog shrouds Athens as Greeks choke on fuel bills

As night falls, thick clouds of black smoke cover Greece's sky, making it hard to breathe outside. The familiar winter smell of wood burning in fireplaces has turned into a public health threat, with cash-strapped Greek households turning to firewood for heat .

Smog has long plagued Athens. But the problems reported in the 1990s were largely the consequence of an economic boom, when an average family in the capital owned more than one car and industrial production was at its peak. But time around, it is a consequence of the financial crisis.

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Central Athens, Greece

The Greek government increased tax on heating oil to bring it in line with taxes on motor fuel, sending prices up 30 percent. At 1.30 euro per liter, many people chose not to buy heating oil and turn to cheaper solutions.

(Read more: Greece to exit bailout plan in 2014: Prime Minister)

Maria, 65, lives in a block of flats in Aghia Paraskevi, a suburb of Athens. Her neighbors refuse to bear the shared cost for heating oil used for the building's central heating, so she has to use other ways to keep her flat warm this winter. "I actually do have the money for oil, but I cannot pay for the whole block of flats, so I have to light up the fireplace or use an electric heater."

Other people are in a far worse situation, and don't even have the money to pay for electricity or wood. So they burn scrap wood and garbage, releasing carcinogenic substances in the air. "At night, everything is blurry outside, a bit like fog, and it smells so badly that you feel you are choking. It smells like burned wood, like a fireplace burning, but on a much larger scale.", says 25-year old Evangelia, who lives in Athens. "Even if you are driving in your car and all the windows are shut, you can still smell it.", she says.

The number of people going to the hospital with respiratory problems has risen by 10 percent, but Health Minister Adonis Georgiadis says this is normal during the winter season. Doctors warn of the high health risks and even the government advised the public to avoid outdoor exercise and try to stay at home.

Greece, which takes over the rotating EU Presidency on Wednesday, could do without the negative publicity.

(Read more: Parliament approves 2014 budget in Greece)

The government is trying to curb the issue; on Saturday it announced it would offer a 70 percent discount on electricity on days when smog levels are high for consumers who use less than 2000 KW per four months. The measure is meant to encourage the use of electrical heating appliances, instead of fireplaces. The discounts will take a 40 million euro ($54.4 million) bite out of the government's 2014 budget. The news followed an extension of heating fuel subsidies, first introduced last year, to cover more families and offer free electricity to the poor for two days whenever when air pollution exceeds the dangerous level of 150 mg/m3.

Dimitris, who lost his job as a German language teacher in 2010 and earns an average of 300 euro a month freelancing, said given his income and the current fuel prices, he would never pay for heating oil. "I opt for cheaper solutions, fireplace or even electric heating devices that come at a lower cost of 25 cents per hour", he said.

With unemployment in Greece at record highs of around 28 percent, he is far from alone.

Heating oil orders have decreased by 60 percent since 2012. According to finance minister Yannis Stournaras, only eleven percent of that is due to the higher tax imposed. "The rest is due to the recession, milder weather conditions and the government's efforts to combat smuggling", Stournaras said at a press conference discussing high levels of smog.

The government tax revenue target from heating oil fell short by 5 percent or 353 million euro in 2013.

(Read more: Greek Finance Minister: Troika deal still possible)

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