Energy Poverty and Income Poverty: How Do They Differ?

by Doug Barnes, Shahid Khandker and Hussain Samad

There is a continuing discussion over what constitutes energy poverty with several approaches being used to define it.  But as yet, no consensus has emerged for measuring and monitoring energy poverty and explaining why and how it differs from income poverty.  After all, income poverty is a standard measure, so if the two are highly related it would not be worth the effort to develop a unique measure for energy poverty.  In other words, why create a separate indicator of energy poverty because in the end it would just be a reflection of income poverty.  Everyone seems to know about energy poverty,but truly defining and measuring it gets a bit complicated. 

About 10 years ago energy poverty was thought to be related mainly to lack of access to electricity.  More recently the United Nations and Department of International Development of Great Britain (DFID) have broadened definitions of energy poverty to multiple indicators using somewhat arbitrary weights.  International Energy Agency (IEA) has never actually defined energy poverty (except that it is related to lack of access to modern energy), but advocated that better ways of using biomass energy for cooking should be an important policy for household energy.  Also, most international organizations measure energy poverty indicators as outputs (e.g., lack of electricity connections) rather than outcomes (e.g., welfare gains from electricity consumption).  Thus, unlike income poverty—which is usually based on minimum consumption of food and non-food items necessary to sustain a livelihood—energy poverty lacks a well-established theory based on energy demand to establish a relevant poverty line. 

In several recent papers the authors of this post have taken a different approach, focusing on energy demand in order to define energy poverty.  Like income poverty, energy poverty may be defined by the minimum energy consumption needed to sustain lives.  This approach defines an energy poverty line as a threshold of energy consumption needed to sustain life.  Similar to the concept of income poverty, we reasoned that there had to be a point at which energy is essential for living.  After all, people have to cook their food; in cold climates they must heat their homes; and they generally need a minimum level of light in the evening for basic tasks (sometimes including eating).  In theory this is all well and good, but the question remained how to measure that threshold. 

Figure 1:  Energy End Use Energy Consumption by Income Class,
Bangladesh and India

Therefore, we tested this demand approach using rich household survey data sets from Bangladesh and India.  We found that although energy consumption rises with income, this increase is not uniform (Figure 1).  This is because energy consumption at lower income groups turned out to be somewhat flat--in economist's terms it is income inelastic (does not rise with income).  After those minimum levels, energy consumption increased for households with ever higher incomes--once again in economist's terms, income elastic (does increase with income).  The theory is that for those levels where the energy income relationship is inelastic, this is the minimum level of energy necessary to maintain a healthy life.  This is the basic level of cooking, heating, lighting or other energy service needed to sustain life. 

Energy Services for the Poor: A Review of World Bank Lending

By Doug Barnes

A couple of years ago I completed this review of Modernizing Energy Services for the Poor:  A World Bank Investment Review 2000-2008.  This was followed by extensive reviews and then revisions.  And this was followed by new revisions and fresh reviews and so on and so forth.  I am happy to announce that this report is finally out and comments are welcome, but no more reviews please. 



Source: World Bank Investments in Energy Access: 2000-08(Figures are Millions)

It may seem like a trivial exercise to classify energy access lending, but nothing could be further from the truth.  When you think about it almost all energy investments can be considered as promoting or being related to energy access.  Energy sector reform makes it possible to have a well functioning energy markets, and this is turn means the electricity and other forms of energy can reach the poor.  Likewise, rural electrification would not be possible without generation and transmission projects.  So where do you draw the line for ruling in investments as relating to energy access energy poverty or ruling them out. 

Energy Poverty Continued: A Narrative from Andrew Barnett

I have received a rather long comment from Andrew Barnett from The Policy Practice and I thought it would be good to include his insights on energy poverty as a main post. The slightly revised text below is from Andrew Barnett.

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A Narrative on Energy Poverty by Andrew Barnett

Fuel Collection Bangalore, India Photo by D. Barnes

A new generation of people has recently become interested in “Energy Access” and I am frequently asked what did we learn over the past 30 years. What follows is my attempt to put together a “simple narrative” about what we know about energy poverty.

It is probably useful to start by making the distinction between primary energy, energy conversion technology, and the idea of “useful energy” or (better) modern energy services. So the issue is how to enable poor people to gain greater use of the services made possible by modern energy. This is the crucial insight that enables “decision makers” to see the problems involved. Namely, the problems involve an increase in the supply of modern energy forms and great access to and utilization of energy conversion technology. This leads on to to issues of energy conversion efficiency, and the ability of people to pay for the services. It has been said for a long time that poor people do not lack access to energy (they are sweltering in the heat from the sun and many have biomass all around them). What they lack is the means to make it useful to them. This usually involves the expenditure of capital on equipment to turn biomass and the sun’s energy into energy that is useful for them. Energy poverty no doubt results from money poverty and is largely about the inability to pay for modern energy services. Focusing on energy use at the outset focuses attention on the demand side of the problem.

Continue below....

Comparative Cooking Costs in Developing Countries

By Douglas Barnes and Keith Openshaw

Kerosene Lamps and Stoves, Hyderabad, India by D. Barnes

Recently we have just reviewed many of programs for improved stoves in developing countries, and we were quite surprised to find that there were few analyses of comparative cooking costs. In the glory days of country energy assessments comparing the cost of cooking to enlighten energy policy makers was very common. Today we stress energy efficiency, combustion, emissions, and carbon. However, if people are going to adopt these stoves the comparative cooking costs are an obvious important place to start. Keith Openshaw who has extensive experience with improved stoves is a coauthor of this posting. 

To revive this lost art, we will explain the steps for calculating comparative cooking. The first step is to assemble the necessary data. This includes:

• Cost of the stove;
• Lifetime of the stove;
• Efficiency of the stove;
• Price of fuels used burned by the stove including wood or other biomass fuels;
• Fuel collection hours for biomass fuels;
• Quantity of fuel consumed in the household per month; and
• Average wage of agricultural workers.

One caveat is that the comparative costs in this analysis are hypothetical because they assume that families cook exclusively with one fuel. Also, we use world market prices and average fuel consumption levels as defined by many different household energy surveys. Thus, these figures can be considered as typical but they do not relate to any one country due to various policies to tax and subsidize household fuels. They at least give us some perspective on the comparative costs of cooking in developing countries.

For much more continue below....

Facing Rural Energy Realities in Bangladesh

Adult Literacy Class, Bangladesh by Shehzad Noorani

People often forget that once Bangladesh was close to being the poorest country on the planet. Things certainly have changed in recent years. Bangladesh has always had policies for open trade that have helped the country become an exporter of manufactured goods, much of which has resulted from allowing investments by multinational firms.  Generally economic growth has been very positive in recent years.

The country also has a very ambitious and successful grid rural electrification program that was modeled after the USA rural electric cooperatives which is considered a “best practice.” Even for those rural households distant from the electricity grid, since 2002 there has been a very successful rural energy fund that is administered by a government bank. This fund along with prominent non-governmental organizations such as Grameen Shakti (part of Grameen Bank) and BRAC have been very active in promoting solar household systems for basic electric lighting and communications services for those out of reach from the grid electricity system. In recent years they also have been expanding to other rural energy technologies such as biogas and improved cookstoves.

Much more below....

Measuring Household Lighting: Survey Design Issues

Lighting: Credit NRECA

In developed countries we take electric lights for granted. We throw a switch, and presto the room lights up from ceiling to floor. But we all have experienced life without electricity during periodic brownouts and blackouts when we get out the candles for several hours. Unfortunately for the approximately 1.5 billion people without electricity in developing countries, there is no switch to throw.

One of the major benefits of rural electrification in developing countries is household lighting. In fact, people often ask my advice on how to measure such benefits. The issues can range from sampling to questionnaire design to sampling techniques. Thus, this is the first in a series of blogs which I will call Survey Design. For the first in this series, I am going to focus on how to measure household lighting. Stay tuned for more on surveys.

Lighting Efficinecy: Credit D. Barnes

People without electricity in developing countries generally light their homes with candles or kerosene wick lamps. The light given from a kerosene lamp is very dim and not great for reading and there is a good reason for this. For measuring lighting in households it is essential to understand that light is measured in lumens. A lumen is a unit used for measuring brightness. A kerosene lamp or a candle gives off about 11 lumens (see chart). By comparison a 100 watt incandescent light bulb provides 1,600 lumens, which is labeled on most packaging. The figure demonstrates that electric lights are much more efficient in converting energy into light. In a measurement study on lighting output it was found that a 100 watt incandescent light bulb typically found in developing countries actually turned out to provide 12.8 kilolumens of light per kilowatt hour compared to 0.1 kilolumens per kilowatt hour for a kerosene lamp. Fluorescent lights are even more efficient.

The reason for the difference between the lumen levels listed on the label on a light bulb package and the testing results has to do with the measurement environment. Actual lumen levels vary based on factors such as reflectors, lenses and location of the light in a room.

Efficiency of Lamps: Credit D. Barnes

How does that have an impact on household lighting? I will demonstrate this by using the results of a household energy survey from Peru. These results are based on actual use of various lighting sources for a national rural sample of 6000 households. As can be seen, the candle and kerosene lamps provide barely enough light to walk around the house. Car Batteries are used for lighting by households with higher incomes but without grid electricity and they provide more light. Due to the efficiency of converting energy into light, electricity from the grid is the best source for household lighting for households who participated in the survey in rural Peru. One may wonder why these household without electricity do not use household photovoltaic systems, but that will be the subject of another post.

For more resources on this topic click the link below. 

Cooking with LPG: Climate and Poverty Issues

What is the largest improved stove program in the developing world? The answer may surprise you. It is the Liquid Petroleum Gas (LPG) stove. The use of LPG worldwide has been growing for many years. It is not a renewable fuel like biomass energy, but it is clean burning and provides much greater efficiency than even the best improved biomass stoves. For those not familiar with LPG, it is quite similar to propane.

Retail LPG Use in India in Millions: Industry Source

LPG is quite commonly used in urban areas of developing countries and is becoming increasingly common in rural areas. In India alone since 1985 the petroleum industry reports that over 100 million households have switched from other cooking sources to LPG. Today even close to 20% of rural household are using LPG mostly for quick heating such as water boiling, and this amounts to about 30 million households. Not only is LPG subsidized in India, but it has become more widely available over the years.

India has had an aggressive LPG promotion campaign for years and just recently announced that there will be a program to provide free stoves to households below the poverty line. The subsidies no doubt are expensive for the government and as the program continues to expand one can question whether such subsidies are justifiable given the ready acceptance of LPG by the mostly high and middle income consumers. But one also might just imagine the positive health impacts of the widespread substitution of LPG for fuelwood. Cooking with LPG gives off minimum pollution and alleviates indoor air pollution.

LPG Cooking in Hyderbad India: by D. Barnes

One little understood fact is that LPG is used mainly by middle to high income families, but it also has indirect impacts on poor urban households who do not even use it. Why is this? The main reason is the pattern of dynamics of energy pricing. Obviously high taxes on LPG raise its overall price and conversely subsides lower the price. The price of fuelwood for cooking quite often mimics price of LPG or kerosene in large urban areas after taking into consideration energy efficiency. Poor people in urban areas generally purchase biomass fuels such as fuelwood or charcoal, so high LPG prices mean high prices for biomass energy. The poor spend quite a bit of their income on energy; it can be as high as high as 15 to 20 percent. Thus, the price of biomass energy is obviously very important for their welfare.

Concerning climate change, encouraging the substitution of LPG for biomass fuels actually may be a winning prospect. It actually takes just over 11 kilograms of wood to provide the same cooking heat as one kilogram of LPG due to higher energy content and greater efficiencies of gas stoves. After some further conversions, for the same cooking task wood burned in open fires actually gives off 4 times more CO2 compared to LPG. It is true that some wood is from renewable sources, but do we really know how much? Also, is it really relevant? Perhaps, but the CO2 is going into the air regardless of its source.

This also does not mean that we should give up on making biomass stoves that are less polluting and more or efficient (see previous blog on new generation of improved stoves). Some new stoves give off levels of pollution that similar to using LPG. There is also a role for cooking with other fuels and technologies such as biogas or perhaps even alcohol in developing countries.

The ultimate goal is to alleviate energy poverty and there are many ways to do it. This might even include the promotion of LPG for cooking. What do you think?

poll by twiigs.com

For more continue reading below.

Improved Biomass Stoves: The Next Generation

There is a new sheriff in town. Today around the world there is an entirely new and innovative variety of improved stoves that are being manufactured in factories or workshops and sometimes backed by large international companies. These new types of stoves generally are made of quite durable materials that will last for 5 to 10 years or even longer and some come with guarantees. The goal of the marketing of these new stoves is to improve energy efficiency of cooking, to lower indoor air pollution, and to reduce labor or cash expenses required for cooking for the poorest half of the world’s population. The idea is to supply the nearly 3 billion people around the world that still use biomass energy with a stove that that is more modern and efficient than the traditional ones that they now use. Will these new stoves bring order to the wild west of improved stoves programs characterized by hundreds of models made out of vastly different local materials and produced by local artisans?

Traditional Stove in India: Photo by S. Desai

Stoves have existed since the beginning of human history. They have come in various sizes and styles, having been adapted to myriad cultures and food preparation methods. As society has progressed, more sophisticated stove models have been developed. Today’s modern kitchen reflects the many types of standardized and specialized cooking devices available from coffee and tea pots to toasters and gas cooktops. In contrast, the poor in developing countries still burn biomass energy in what amounts to open fires. The smoke produced by these primitiave stoves has been associated with a number of diseases, the most serious of which is acute respiratory illness such as bronchitis and pnemonia.

Envirofit Stove Model G-3300 in India: Photo by Envirofit

The development of improved biomss stoves has witnessed several overlapping stages over the last 30 years and today there are actually three types of programs around the world. One type of improved stove is locally made by small businesses or the even those in household members after they trained. Such stoves are very inexpensive at less than 10 dollars each and sometimes even less than 5 dollars. These artisan-made stoves provide relatively good performance when new, but performance degrades over the short one or two year live of the stove. The second type of stove involves manufactured parts, which are assembled on site with local materials. These stoves are still inexpensive but are a bit more expensive and more durable than the artisan stoves. There will be a later blog on these two types of stoves.

Stovetec Stove: Photo by Aprovecho

The competition is heating up for the “next generation” of stoves that are manufactured in their entirely in factories and workshops world. They include efficient biomass stoves, alcohol stoves, stoves that use pellets, and others. Some of the world’s largest companies have become involved including Shell Foundation, Bosch Siemens, Phillips, British Petroleum and others. There are two interesting examples for wood stoves including the Envirofit stoves and the Stovetec produced by Aprovecho. Others innovations include the Worldstove, First Energy’s Oorja Stove, Gaia’s Dometic (Gaia project), Bosh-Siemens Protos stove, the Onil stove in Guatemala, and the Justa stove in Honduras. A very interesting new initiative by the Government of India endorses the concept of manufactured stoves and implementation is in the planning stages.

The international donors have been slow to embace or support these new generaton of stoves and admittedly this is still an incomplete picture. However, it may just take some time for the realization to set in that such programs can probably be as important as increasing electricity access in terms of improved health and quality of life such as less fuel collection, shorter cooking time, reduced releases of carbon, and less pressure on local forests.

Its nice that there is more international competition in developing new products. However, the question is should there be more interational attention to this problem?

More resources below.