Energy Access and Poverty in Latin America, 2018

Ecofogon Stove Used in Small Business in Nicaragua

Recently I helped complete a new report on energy access in Latin American the the Caribbean area. The title of the report is Meeting Challenges, Progress: The Benefits of Sustainable Energy Access in Latin America and the Carribean. Making This new report was produced by a joint effort between the Inter-American Development Bank and the United Natoins Development Programme.

Energy access is an essential prerequisite for economic, social, and human development. The 2015 United Nations Sustainable Development Goals (SDGs) explicitly recognized affordable and clean energy as a key factor in development, alongside education and poverty alleviation. The UN Sustainable Energy for All initiative (SEforALL) mobilizes international donors, countries, and the private sector to help people in developing countries gain access to modern energy services.

To assist in support of sustainable energy for all goals, I was recently involved in producing this joint study of the Inter-American Development Bank (IDB) and the United Nations Development Programme (UNDP). it provides a comprehensive review of energy poverty policies and programs in Latin America and the Caribbean. This report measures the progress and impact of energy-access programs and also documents the experience of successful projects. This study reviews cutting-edge methodologies to assist in program design, shares of experiences of successful programs and develops a vision for reaching sustainable energy for all in the LAC region.

With electricity coverage at more than 96 percent, Latin America and the Caribbean (LAC) is close to becoming the world’s first developing region to achieve universal access to electricity. Despite recent progress, within LAC there are still substantial pockets of energy poverty. Approximately 21.8 million people are without electricity access. More than 80 million people rely on firewood and charcoal for cooking that is burned in fuel-inefficient, primitive stoves. These traditional cooking technologies emit a significant amount of indoor air pollution (IAP), which has been linked to respiratory illnesses and adverse environmental impacts. Thus, in addition to promoting electricity, energy access programs also might give priority to the promotion of cleaner methods cooking by making available better stoves and cleaner burning fuels at reasonable costs.

The report also explores ways to measure energy poverty and monitor energy access in developing countries. The accuracy and effectiveness of tools such as the IEA’s household energy data efforts and the Global Tracking Framework depend on collecting information through standardized national surveys. Approaches to measuring energy poverty and monitor energy access have increasingly focused on the provision of energy services such as lighting, space conditioning and cooking.

The transition from low-quality energy services to more modern forms can be accomplished in different ways. As households in developing countries adopt electricity and clean methods of cooking, they benefit from higher quality, lower cost and convenient to use appliances. However, measuring the societal and developmental benefits of energy investments--though difficult--is important.

Two basic approaches have evolved over the years to measure the benefits of energy access: (i) consumer surplus and (ii) regression-based techniques. The consumer surplus approach evaluates the economic benefits of energy services by measuring increased demand resulting from lower costs of such energy end uses such as lighting, radio and television. When possible, rigorous impact evaluation techniques based on multivariate models can be used to more directly measure the socioeconomic benefits associated with energy access and modern energy services including higher income and improved education.

In recent years, new approaches for meeting the requirements of modern and sustainable energy services have emerged. Due to technical and market changes, new types of equipment have become available for providing energy services to rural areas. In LAC, three basic models have been developed to provide rural populations with electricity service: (i) main grid extension, (ii) community networks, and (iii) individual home-based systems (including clean cookstoves).

The level of investments necessary to achieve the 2030 SDG target for expanded electricity access for all will be quite high. Reaching the universal access goal will require developing innovative partnerships between the public and private sectors. All three models benefit from favorable institutional and policy conditions, including funding mechanisms like subsidies and small-scale finance. In addition, various kinds of specialized energy funds have been developed to promote energy access. The new focus on remote areas may require some rethinking of the institutions and subsidies necessary to promote decentralized electrification programs.

A multifaceted approach to solving rural energy problems is essential for bringing remote or underserved populations into the twenty-first century. New electricity technologies and innovative business models are emerging to deal with the poorest and most remote populations in LAC. Such innovation needs to expand to include more initiatives for better cooking fuels and clean-burning, fuel-efficient biomass stoves. Proper impact evaluation of energy access interventions is needed to justify program subsidies and to better target such programs to poor and remote populations.

Over the past two decades, the LAC region has made remarkable progress toward providing sustainable, modern energy for all. Going forward, the challenge is to provide electricity and clean cooking solutions to the region’s most remote, vulnerable and poorest populations.