How to deal with energy poverty?

The United Nations declared 2012 the year of sustainable energy for all. One of the objective put forward by this initiative is the universal access to energy, even for the most deprived. Energy consumption is a dimension of poverty that has been recognized as problematic also in rich countries: in the past decades, France, Belgium, the UK, among others, have built particular programs aiming at helping the poor to have sufficient access to energy.[1]

A first question that comes directly to mind: Why do governments care especially about the energy component of poverty? The main reason for this is that energy is required to meet basic human needs. Cooking food and heating dwellings are obvious examples of the vital services energy provides. Once it is understood, the second question of interest is how to help the poor get these services. Should governments just subsidize their energy consumption in a way or another (common way of dealing with energy poverty[1])? Besides the distortionary effects they create, there is another reason why implementing price subsidies would not be the best type of policy to achieve that target.

Energy is just an instrument. This resource can provide a service (cooking, heating) when it is put into action via a certain technology. A common feature of deprived people is that the technology they have access to is characterized by a low efficiency. This means they require more energy than others to get the same service. This is illustrated in the following two examples, the first coming from a developing country and the second concerning a developed country.

Bilal Mirza recently wrote with René Kemp[2] and Adam Szirmai[3] about energy poverty in rural Pakistan. In that region, people generally do not have access to modern energy sources like electricity and natural gas. For their domestic energy needs, they rely on various energy sources like firewood, plant and animal waste, kerosene, etc. Besides the inconvenience to collect or produce it, the technology used to put those sources of energy in action (like fire wood) are quite inefficient. Consequently, even though the amount of primary energy available to them may be comparable to that of persons living in the cities of Pakistan, they get a lower service out of it. In their conclusions, the authors advice hence to improve the access to electricity and gas but also to “promote modern cooking technologies at household level”.

If the access to modern energy sources is less problematic in Belgium, the technology available to low income households is also less efficient. This fact is noted by the authors of the 2012 yearbook about poverty in Belgium[1]. Obviously, it requires few gas to heat a well insulated house with a recent condensing boiler, but not everyone can make those investments.

A striking conclusion is that poor persons coming from both developing and developed countries face the same problem regarding energy: low technological efficiency. Giving access to a better techonology would hence be an efficient policy to help the poor meet their basic needs while avoiding wasting this scarce resource.

[1] Vranken, J., Lahaye, W., Geerts, A. and Coppée, C., Pauvreté en Belgique, Annuaire 2012,  acco Leuven/ Den Haage.

[2] Mirza B. and Kemp, R.,Why the rural rich remain energy poor, Consilience: The Journal of Sustainable Development  Vol. 6, Iss. 1 (2011), Pp. 133–155.

[3] Mirza B. and Szirmai, A., Towards a new measurement of energy poverty: A cross-community analysis of rural Pakistan. UNU-Merit Working Papers ISSN 1871-9872.

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