Energy poverty

Units of analysis

Domestic energy poverty

Domestic energy poverty refers to a situation where a household does not have access or cannot afford to have the basic energy or energy services to achieve day to day living requirements. These requirements can change from country to country and region to region. The most common needs are lighting, cooking energy, domestic heating or cooling.

Other authors consider different categories of energy needs from "fundamental energy needs" associated to human survival and extremely poor situations. "Basic energy needs" required for attaining basic living standards, which includes all the functions in the previous (cooking, heating and lighting) and, in addition energy to provide basic services linked to health, education and communications. "Energy needs for productive uses" when additionally basic energy needs the user requires energy to make a living; and finally "Energy for recreation", when the user has fulfilled the previous categories and needs energy for enjoyment." Until recently energy poverty definitions took only the minimum energy quantity required into consideration when defining energy poverty, but a different school of thought is that not only energy quantity but the quality and cleanliness of the energy used should be taken into consideration when defining energy poverty.

One such definition reads as:

"A person is in 'energy poverty' if they do not have access to at least:

(a) the equivalent of 35 kg LPG for cooking per capita per year from liquid and/or gas fuels or from improved supply of solid fuel sources and improved (efficient and clean) cook stoves

and

(b) 120kWh electricity per capita per year for lighting, access to most basic services (drinking water, communication, improved health services, education improved services and others) plus some added value to local production

An 'improved energy source' for cooking is one which requires less than 4 hours person per week per household to collect fuel, meets the recommendations WHO for air quality (maximum concentration of CO of 30 mg/M3 for 24 hours periods and less than 10 mg/ M3 for periods 8 hours of exposure), and the overall conversion efficiency is higher than 25%. "

Composite indices

Energy Development Index (EDI)

First introduced in 2004 by the International Energy Agency (IEA), the Energy Development Index (EDI) aims to measure a country's transition to modern fuels. It is calculated as the weighted average of four indicators: "1) Per capita commercial energy consumption as an indicator of the overall economic development of a country; 2) Per capita consumption of electricity in the residential sector as a metric of electricity reliability and customers׳ ability to financially access it; 3) Share of modern fuels in total residential energy sector consumption to indicate access to modern cooking fuels; 4) Share of population with access to electricity." (The EDI was modeled after the Human Development Index (HDI).) Because the EDI is calculated as the average of indicators which measure the quality and quantity of energy services at a national level, the EDI provides a metric that provides an understanding of the national level of energy development. At the same time, this means that the EDI is not well-equipped to describe energy poverty at a household level.

Multidimensional Energy Poverty Index (MEPI)

Measures whether an individual is energy poor or rich based on how intensely they experience energy deprivation. Energy deprivation is categorized by seven indicators: "access to light, modern cooking fuel, fresh air, refrigeration, recreation, communication, and space cooling." An individual is considered energy poor if they experience a predetermined number of energy deprivations. The MEPI is calculated by multiplying the ratio of people identified as energy poor to the total sample size and the average intensity of energy deprivation of the energy poor. Some strengths of the MEPI is that it takes into account the number of energy poor along with the intensity of their energy poverty. On the other hand, because it collects data at a household or individual level, it is harder to understand the broader national context.

Energy Poverty Index (EPI)

Developed by Mirza and Szirmai in their 2010 study to measure energy poverty in Pakistan, the Energy Poverty Index (EPI) is calculated by averaging the energy shortfall and energy inconvenience of a household. Energy inconvenience is measured through indicators such as: "Frequency of buying or collecting a source of energy; Distance from household traveled; Means of transport used; Household member's involvement in energy acquisition; Time spent on energy collection per week; Household health; Children's involvement in energy collection." Energy shortfall is measured as the lack of sufficient energy to meet basic household needs. This index weighs more heavily the impact of the usability of energy services rather than its access. Similar to the MEPI, the EPI collects data at a micro-level which lends to greater understanding of energy poverty at the household level.

Critiques of measuring energy poverty

Energy poverty is challenging to define and measure because energy services cannot be measured concretely and there are no universal standards of what are considered basic energy services. Energy poverty is too complex to work and measure with an indicator and framework that is internationally accepted in a global context. Therefore, binary measures and multidimensional measures of energy poverty are required to consolidate and establish indicators that simplify the process of measuring and tracking energy poverty globally. There is no homogenous definition and international measure to use as a standard globally, even the definition of energy poverty is not the same among countries in the European Union.

Intersectional issues

Energy poverty often exacerbates existing vulnerabilities amongst already disadvantaged communities. For instance, energy poverty negatively impacts women's health, threatens the quality and quantity of children's education, and damages household and public health.

Gender

Due to traditional gender roles, women are generally responsible for gathering biomass for energy. Women also spend much time cooking in a kitchen. The physically straining labor brings chronic fatigue to women. Moreover, women and children, who stick around their mothers to help with domestic chores, respectively, are in danger of long-term exposure to indoor air pollution caused by burning traditional biomass fuels. Using biomass as fuel for heating and cooking thus disproportionately affects women and children as they are the primary family members responsible for cooking and other domestic activities within the home. Being more vulnerable to household air pollution from burning biomass, 85% of the 2 million deaths from indoor air pollution are attributed to women and children. During combustion, carbon monoxide, particulates, benzene, and the likes cause many women and children suffer from acute respiratory infections, lung cancer, asthma, and other diseases. "According to the World Health Organization, exposure to indoor air pollution is responsible for the nearly two million excess deaths, primarily women and children, from cancer, respiratory infections and lung diseases and for four percent of the global burden of disease. In relative terms, deaths related to biomass pollution kill more people than malaria (1.2 million) and tuberculosis (1.6 million) each year around the world."

In developing countries, women and girls' health, educational, and career opportunities are significantly affected by energy because they are usually responsible for providing the primary energy for households. Women and girls spend a significant amount of time looking for fuel sources like wood, paraffin, dung, etc. leaving them less time to pursue education, leisure, and their careers. In developed countries, women are more vulnerable to experiencing energy poverty because of their relatively low income compared to the high cost of energy services. For example, women-headed households made up 38% of the 5.6 million French households who were unable to adequately heat their homes. Lack of access to energy services has even been proven to increase feelings of isolation and despair within those affected by these disadvantages. Older women are particularly more vulnerable to experiencing energy poverty because of structural gender inequalities in financial resources and the ability to invest in energy-saving strategies.

Education

With many dimensions of poverty, education is a very powerful agent for mitigating the effects of energy poverty. Limited electricity access affects students' quality of education because it can limit the amount of time students can study by not having reliable energy access to study after sunset. Additionally, having consistent access to energy means that girl children, who are usually responsible for collecting fuel for their household, have more time to focus on their studies and attend school.

Ninety percent of children in Sub-Saharan Africa go to primary schools that lack electricity. In Burundi and Guinea, only 2% of schools are electrified, while in DR Congo there is only 8% school electrification for a population of 75.5 million. In the DRC alone, by these statistics, there are almost 30 million children attending school without power.

Education is a key component in growing human capital which in turn facilitates economic growth by enabling people to be more productive workers in the economy. As developing nations accumulate more capital, they can invest in building modern energy services while households gain more options to pursue modern energy sources and alleviate energy poverty.

Health

Households who are energy poor are more likely to use traditional biomass such as wood and cow dung to fulfill their energy needs, which leads to incomplete combustion and releases black carbon into the atmosphere. Black carbon can be a health hazard. Research has found that people who live in energy poverty have an increased risk of respiratory diseases like influenza and asthma and even a positive correlation with higher mortality rates during winters. Moreover, research analyzing the inadequate heating systems in houses in the United Kingdom has found a correlation between this lack of access to proper heating services and an increased risk of mortality from cardiovascular diseases.

Development

"Energy provides services to meet many basic human needs, particularly heat, motive power (e.g. water pumps and transport) and light. Business, industry, commerce and public services such as modern healthcare, education and communication are highly dependent on access to energy services. Indeed, there is a direct relationship between the absence of adequate energy services and many poverty indicators such as infant mortality, illiteracy, life expectancy and total fertility rate. Inadequate access to energy also exacerbates rapid urbanization in developing countries, by driving people to seek better living conditions. Increasing energy consumption has long been tied directly to economic growth and improvement in human welfare. However it is unclear whether increasing energy consumption is a necessary precondition for economic growth, or vice versa. Although developed countries are now beginning to decouple their energy consumption from economic growth (through structural changes and increases in energy efficiency), there remains a strong direct relationship between energy consumption and economic development in developing countries."

Climate change

In 2018, 70% of greenhouse gas emissions were a result of energy production and use. Historically, 5% of countries account for 67.74% of total emissions and 50% of the lowest-emitting countries produce only 0.74% of total historic greenhouse gas emissions. Thus, the distribution, production, and consumption of energy services are highly unequal and reflect the greater systemic barriers that prevent people from accessing and using energy services. Additionally, there is a greater emphasis on developing countries to invest in renewable sources of energy rather than following the energy development patterns of developed nations.

The effects of global warming, as a result of climate change, vary in their correlation to energy poverty. In countries with cold climates where energy poverty is primarily due to the lack of access to proper heating sources, average temperature increases from global warming result in warmer winters and decrease energy poverty rates. On the contrary, in countries with warm climates where energy poverty is primarily a result of inadequate access to cooling energy sources, warmer temperatures exacerbate energy poverty in these regions.

A 2024 study of the relationship between energy poverty and temperature extremes in Australia found that hardship increases in both extreme cold and extreme hot temperatures, and that climate change will not result in the elimination of energy hardship as extreme heat will drive energy needs.

Solutions

One specific recommendation for reducing the negative effects of energy poverty on public health is the distribution and improvement to clean, efficient cook stoves among disadvantaged communities that suffer from the effects of lack of access to energy services. Proposed as an alternative for the improvement of public health and welfare, the distribution of cooking stoves could be an inexpensive and immediate approach to decreasing mortality rates within the sector of energy poverty. These cooking stoves would, however, need to be connected to an appropriate energy source. Distributing cleaner liquified petroleum gas (LPG) or electric stoves (in electrified areas) among developing countries would prevent the inadequate cooking and dangerous exposure to traditional biomass fuel. Although this change to cleaner, and more convenient to use appliances can be practical, there is still great emphasis within the movement to eliminate energy poverty through substantial policy change.

A general suggestion is to incentivize the building of infrastructure, such as electrification, by harnessing potential sources of energy in energy poor countries to mine Bitcoin.

Regional analysis

Energy poverty is a complex issue that is sensitive to the nuances of the culture, time, and space of a region. Thus, the terms "Global North" and "Global South" are generalizations and not always sufficient to describe the nuances of energy poverty, although there are broad trends in how energy poverty is experienced and mitigated between the Global North and South.

Global North

Energy poverty is most commonly discussed as fuel poverty in the Global North where discourse is focused on households' access to energy sources to heat, cool, and power their homes. Fuel poverty is driven by high energy costs, low household incomes, and inefficient appliances (a global perspective). Additionally, older people are more vulnerable to experiencing fuel poverty because of their income status and lack of access to energy-saving technologies. According to the European Fuel Poverty and Energy Efficiency (EPEE), approximately 50-125 million people live in fuel poverty. Like energy poverty, fuel poverty is hard to define and measure because of its many nuances. The United Kingdom (UK) and Ireland, are one of the few countries which have defined fuel poverty to be if 10% of a household's income is spent on heating/cooling. The British New Economics Foundation has proposed a National Energy Guarantee (NEG) to lower and fix prices on essential energy. Another EPEE project found that 1 in 7 households in Europe were on the margins of fuel poverty by using three indicators of checking for leaky roofs, arrears on utility bills, ability to pay for adequate heating, mold in windows. High energy prices, insufficient insulation in dwellings, and low incomes contribute to increased vulnerability to fuel poverty. Climate change adds more pressure as weather events become colder and hotter, thereby increasing demand for fuel to cool and heat the home. The ability to provide adequate heating during cold weather has implications for people's health as cold weather can be an antagonistic factor to cardiovascular and respiratory illness.

Brenda Boardman's book, Fuel Poverty: From Cold Homes to Affordable Warmth (1991) motivated the need to develop public policy to address energy poverty and also study its causes, symptoms, and effects in society. When energy poverty was first introduced in Boardman's book, energy poverty was described as not having enough power to heat and cool homes. Today, energy poverty is understood to be the result of complex systemic inequalities which create barriers to access modern energy at an affordable price. Energy poverty is challenging to measure and thus analyze because it is privately experienced within households, specific to cultural contexts, and dynamically changes depending on the time and space.

Global South

Energy poverty in the Global South is largely driven by a lack of access to modern energy sources because of poor energy infrastructure, weak energy service markets, and insufficient household incomes to afford energy services. However, recent research suggests that alleviating energy poverty requires more than building better power grids because there is a complex web of political, economic, and cultural factors that influence a region's ability to transition to modern energy sources. Energy poverty is strongly linked to many sustainable development goals because greater energy access enables people to exercise more of their capabilities. For example: greater access to clean energy for cooking improves the health of women by reducing the indoor air pollution associated with burning traditional biomasses for cooking; farmers can find better prices for their crops using telecommunication networks; people have more time to pursue leisure and other activities which can increase household income from the time saved from looking for firewood and other traditional biomasses, etc. Because the impacts of energy poverty on sustainable development are so complex, energy poverty is largely addressed through other avenues that promote sustainable development in regions within the Global South.

Africa

Sub-Saharan Africa, Latin America, and South Asia are the three regions in the world most affected by energy poverty. Africa's unique challenge with energy poverty is its rapid urbanization and booming urban centers. On average, only 25% of people who reside in urban areas in Africa have electricity access. Study findings have informed policy makers in African countries on state intervention methods to increase household energy access and reduce the gap in educational opportunities between rural and urban areas. Historical trends show that Africa's rapid population growth has not been proportionally matched by increased access to electricity. The rise of poverty in urban centers in addition to the growing population and energy demand is driving up the cost of electricity, making energy even more inaccessible for Africa's least advantaged individuals.

A study involving data from 33 African countries from 2010-2017 demonstrates a strong correlation between energy poverty, infant mortality, and inequality in education. Infant mortality for children under 5 in Africa is a prevalent consequence of energy poverty. The spread of waterborne diseases, smoke emissions, and low fuel quality continues to affect infant mortality and negatively impact educational performance among children in the region. Although urban areas in Africa are not proportionally increasing to meet the fast pace of urbanization, of the 2.8 billion people who still use unclean and unsafe cooking facilities, most reside in the rural regions of Sub-Saharan Africa. On average, girls receive lower education than boys in the rural areas of the region affected by the lack of clean energy sources. There is an increased need for decentralized sources of energy to mitigate the consequences of energy poverty in rural areas of Africa and its disproportionate effect on women's health and education.

The population of African suffering from energy poverty is 57% women and 43% men. The case for "energy-gender-poverty" demonstrates a relationship between energy poverty and gender inequality. Because women are typically assigned "energy responsibilities" in African cultures, like fetching daily loads of coal and firewood to meet their households' energy needs, they are typically at the forefront of the consequences of energy poverty. Policies to mitigate include a change towards gender-friendly allocation of energy responsibilities and increased access and affordability of modern and clean energy.

South Asia

Energy poverty in South Asia encompasses more than just unreliable, unaffordable access to energy; it also includes the broader dimensions of the growing demand for electricity, access to energy, energy dependence, environmental threats to the energy system, and global pressures to decarbonize. Energy demand in South Asia has grown at an average annual rate of five percent in the past two decades, and this demand is projected to double by 2050. The demand for electricity in particular has been driven by the increasing population and the development of industry throughout the region. Although a push for energy efficiency has substantially reduced electricity demand due to economic growth, the electricity system in the region is still struggling to meet the needs of the growing population and economy.

In 2020, 95.8 percent of the total population in South Asia, and 99.7 percent of the urban population, had access to electricity, making it the second-largest region in the world with an electricity access deficit. However, in India only ten percent of homes in a village must be connected to the electricity grid in order for that entire village to be considered electrified. Other complications that lead to energy poverty include: flaws in the energy system that result in power losses, load shedding practices that shut down the grid during peak periods, and power that is stolen through informal electricity lines.

The reliability of the electricity system can also be hindered by the source of the electricity generated. In 2014, South Asia imported one-third of the total energy consumed in the region. Due to this energy dependence on imported fuel, energy resource scarcity and fluctuations in global price can result in higher costs for electricity in South Asia and can therefore make electricity services less accessible for the least advantaged people. The issue of energy poverty is compounded when climate change is factored into the equation. South Asian cities like Delhi in India are bearing the social and fiscal costs of this demand-supply gap, resulting in a power crisis.

Latin America

The United Nations Development Programme (UNDP) and the Inter-American Development Bank have provided reports and reviews of programs and policies designed to address energy poverty within Latin America and the Caribbean (LAC). Although studies show 96 percent of inhabitants of the LAC have access to electricity, gaps in energy poverty are still prevalent. Oftentimes linked to socioeconomic cleavages, energy poverty within LAC still exposes more than 80 million people to respiratory illnesses and diseases for relying on fuels like charcoal to cook.

Energy poverty is widespread in Latin America. at the Summit of the Americas, an agreement was established to eliminate energy poverty within the following 10 years, by 2022. In addition to the inability to pay for energy expenses, some 30 million people in Latin America, or 5% of the population, lack access to electricity. In 1999, the number of people living in poverty in Latin America was 211 million.

According to the United Nations, urban energy poverty in Latin America has nearly doubled in the last two decades. Growing rates of urbanization and industrialization in Buenos Aires, Argentina, Rio de Janeiro, Brazil, and Caracas, Venezuela have exacerbated the regions' high energy losses, increased inefficient energy use, and increased political opportunism on marginalized groups affected by urban poverty. The case for analyzing energy poverty in Argentina, Brazil, and Venezuela has been critical in understanding the context of energy access within urban areas and the challenges within the context of global development. The widespread increase in energy across Latin America does not have a uniform solution. In fact, different efforts and legislation to increase energy accessibility have had opposing effects in different Latin American countries. In Venezuela, for instance, public attitude supports the free supply of energy across the nation while in Brazil, the public is willing to pay as long as the government passes reforms for the affordability of energy services. Although there has been a recent increase in studies related to energy poverty in Latin America, there have not been many studies and data in the past on the prevalence of energy poverty in many Latin American countries with different climatic areas. For instance, studies in Mexico in 2022 determined that 66 percent of households suffered from energy poverty, with 38 percent of the cases being due to accessibility, and 34 percent due to affordability.

International efforts

International development agencies' intervention methods have not been entirely successful. The COVID-19 Pandemic has demonstrated an increased need for international energy resilience through housing, economic, social, and environmental policies after more than 150 million people were pushed into poverty. "International cooperation needs to be shaped around a small number of key elements that are all familiar to energy policy, such as institutional support, capacity development, support for national and local energy plans, and strong links to utility/public sector leadership. This includes national and international institutions as well as the ability to deploy technologies, absorb and disseminate financing, provide transparent regulation, introduce systems of peer review, and share and monitor relevant information and data."

European Union

There is an increasing focus on energy poverty in the European Union, where in 2013 its European Economic and Social Committee formed an official opinion on the matter recommending Europe focus on energy poverty indicators, analysis of energy poverty, considering an energy solidarity fund, analyzing member states' energy policy in economic terms, and a consumer energy information campaign. In 2016, it was reported how several million people in Spain live in conditions of energy poverty. These conditions have led to a few deaths and public anger at the electricity suppliers' artificial and "absurd pricing structure" to increase their profits. In 2017, poor households of Cyprus were found to live in low indoor thermal quality, i.e. their average indoor air temperatures were outside the accepted limits of the comfort zone for the island, and their heating energy consumption was found to be lower than the country's average for the clusters characterized by high and partial deprivation. This is because low income households cannot afford to use the required energy to achieve and maintain the indoor thermal requirements.

Global Environmental Facility

"In 1991, the World Bank Group, an international financial institution that provides loans to developing countries for capital programs, established the Global Environmental Facility (GEF) to address global environmental issues in partnership with international institutions, private sector, etc., especially by providing funds to developing countries' all kinds of projects. The GEF provides grants to developing countries and countries with economies in transition for projects related to biodiversity, climate change, international waters, land degradation, the ozone layer, and persistent organic pollutants. These projects benefit the global environment, linking local, national, and global environmental challenges and promoting sustainable livelihoods. GEF has allocated $10 billion, supplemented by more than $47 billion in cofinancing, for more than 2,800 projects in more than 168 developing countries and countries with economies in transition. Through its Small Grants Programme (SGP), the GEF has also made more than 13,000 small grants directly to civil society and community-based organizations, totalling $634 million. The GEF partnership includes 10 agencies: the UN Development Programme; the UN Environment Programme; the World Bank; the UN Food and Agriculture Organization; the UN Industrial Development Organization; the African Development Bank; the Asian Development Bank; the European Bank for Reconstruction and Development; the Inter-American Development Bank; and the International Fund for Agricultural Development. The Scientific and Technical Advisory Panel provides technical and scientific advice on the GEF's policies and projects."

Climate Investment Funds

"The Climate Investment Funds (CIF) comprises two Trust Funds, each with a specific scope and objective and its own governance structure: the Clean Technology Fund (CTF) and the Strategic Climate Fund (SCF). The CTF promotes investments to initiate a shift towards clean technologies. The CTF seeks to fill a gap in the international architecture for development finance available at more concessional rates than standard terms used by the Multilateral Development Banks (MDBs) and at a scale necessary to help provide incentives to developing countries to integrate nationally appropriate mitigation actions into sustainable development plans and investment decisions. The SCF serves as an overarching fund to support targeted programs with dedicated funding to pilot new approaches with potential for scaled-up, transformational action aimed at a specific climate change challenge or sectoral response. One of SCF target programs is the Program for Scaling-Up Renewable Energy in Low Income Countries (SREP), approved in May 2009, and is aimed at demonstrating the economic, social and environmental viability of low carbon development pathways in the energy sector by creating new economic opportunities and increasing energy access through the use of renewable energy."