Energy poverty
Energy poverty refers to the lack of access to modern, clean, and safe energy sources necessary for meeting basic needs such as lighting, cooking, and heating. This issue is predominantly observed in developing countries, particularly in rural areas of sub-Saharan Africa and South Asia, where many people still rely on traditional biomass for energy. As of late 2022, approximately 775 million people globally lived without electricity, highlighting the ongoing challenges despite some improvements over the past decade. The implications of energy poverty extend beyond mere access; it affects health, education, economic opportunities, and gender equality, with women and children being the most impacted due to their roles in energy collection and exposure to indoor air pollution.
In industrialized nations, energy poverty, often referred to as fuel poverty, arises mainly from economic factors, whereby households struggle to afford energy costs relative to their income. This has gained attention as rising energy prices and low energy efficiency in older homes have left an increasing number of households vulnerable. Addressing energy poverty is increasingly recognized as essential for achieving broader developmental goals, such as the United Nations' Sustainable Development Goals, which aim for universal energy access by 2030. Solutions to combat energy poverty include investment in renewable energy and energy efficiency measures, which can help facilitate sustainable development and enhance living standards in affected regions.
Energy poverty
Summary: Energy poverty is a global problem resulting from lack of access to energy sources because of either unavailability or cost. Energy poverty is most serious in developing countries, but it can also occur in industrialized countries.
Energy poverty can be defined as lack of access to modern, clean, and safe energy sources to meet basic needs, such as lighting, cooking, boiling water, heating, cooling, earning a living, and using information and communication media. In addition, the term energy poverty is used to describe the unavailability of energy sources and the inability to afford energy sources because of to their relative or absolute costs. Most people affected by energy poverty live in the rural areas of developing countries. However, increasing energy costs resulting from rising energy demand worldwide and anticipated scarcity of fossil energy sources are making access to energy a growing challenge in industrialized countries as well.
Energy, Poverty, and Development
Available energy services fail to meet the needs of the poor. In most developing nations, only a minority of the population use commercial energy in the same way people in the industrialized world do. The overall electrification rates are low, and traditional biomass (firewood, agricultural residues, and animal dung) remains a major fuel source. According to International Energy Agency (IEA) estimates, worldwide, 775 million people lived without access to electricity by the end of 2022. While this represented an increase of only 20 million people compared to the previous year, it still marked an improvement over the 1.2 billion people who did not have access to electricity in 2010. The projections at that time for 2030 suggested that these numbers would largely persist, meaning that large numbers of people would continue to rely on direct combustion of traditional biomass, kerosene, or coal to meet their basic energy needs. Geographically, most people facing energy poverty live in sub-Saharan Africa and South Asia. In South Asia, the situation is expected to improve somewhat because of falling birth rates, infrastructure investments, and economic development; in sub-Saharan Africa, however, there is less hope for rapid improvement.
People living in energy poverty are affected in all aspects of daily life, including health, education, work, access to water, access to information, and gender-related issues. Across borders, the social groups most affected by energy poverty are women and children. Because they are usually in charge of collecting firewood, they also suffer most from the indoor air pollution caused by the direct combustion of biomass. According to the World Health Organization, health hazards caused by indoor air pollution were responsible for 3.2 million deaths in 2020, of which 90 percent occurred in the developing world.
Energy poverty affects not only current living conditions but also prospects for social and economic development in developing nations. Multiple and complex interrelations exist between the access to modern energy services and social and economic progress. Direct correlations can be found between the proportion of the population living below the poverty line and a country’s electrification levels and electricity consumption. Accordingly, the lack of access to efficient, affordable, and clean energy sources interferes with efforts to reduce poverty.
In order to measure the qualitative and quantitative progress a country makes in the fight against energy poverty and to better understand the role that energy plays in human development, the IEA introduced the Energy Development Index (EDI) in 2004. The EDI is composed of four indicators, each of which captures a specific aspect of potential energy poverty in developing countries: per-capita commercial energy consumption, per-capita electricity consumption in the residential sector, share of modern fuels in total residential-sector energy use, and share of population with access to electricity.
The costs of fighting energy poverty were estimated by the IEA in 2017: to achieve universal access to electricity and clean cooking facilities by 2030, an additional investment of $786 billion was required. Although the amount is manageable, most governments in developing countries are unable to provide sufficient funds to improve and expand modern energy services. It is also unlikely that the needed investment in rural areas will be financed by the private sector, as the purchasing power of the rural population is too low to wake government interest. Therefore, joint international efforts will be necessary to provide knowledge and funds to fight energy poverty.
For a long time, many donor countries neglected energy as a development factor. During the last three decades of the twentieth century, only 5 percent of foreign aid was spent on energy projects; however, this amount increased during the early twenty-first century as the development of the green energy sector became a higher priority for many countries. Since the relevance of energy for social and economic development has been internationally perceived, and energy security has become a central topic worldwide, energy is back on the foreign aid agenda, and the proportion of aid for energy projects is increasing.
Possible instruments in the fight against energy poverty are renewable energy and energy efficiency measures. Renewable energy technologies can directly affect livelihoods in remote areas by introducing decentralized sources of energy that can provide access to modern energy services without expensive grid extensions. Energy efficiency can help countries to channel economic growth in an environmentally sustainable way.
Sustainable Development Goals
Without improvements in the energy sector, poverty alleviation is unlikely to be achieved. Consequently, the topic of energy has to be integrated into strategies to fight poverty. The most important international agreement on poverty reduction is the Sustainable Development Goals (SDGs). These grew out of the United Nations Millennium Declaration of 2000, which articulated eight time-bound antipoverty objectives known as the Millennium Development Goals (MDGs). Although energy was not directly addressed in any of the original eight MDGs, the successor SDGs target universal access to modern energy by 2030 and acknowledge the interplay between societal problems, such as lack of energy access and poor health outcomes.
The relevance of energy services to reducing poverty was first explicitly acknowledged at the World Summit on Sustainable Development in Johannesburg, South Africa, in 2002, officially recognizing a critical link between energy access, sustainable development, environmental concerns, and natural resource use. It is important to integrate energy topics into future poverty alleviation strategies and policies, but it will be even more critical to transfer this knowledge into practice.
The 2016 Paris Climate Accords, which were negotiated by 196 parties at the 2015 United Nations Climate Change Conference, included funding and provisions designed to address energy poverty, particularly in developing regions such as sub-Saharan Africa. Many planned investments were intended to stimulate economic growth through the development of the clean energy sector, which would improve food security and hopefully reduce energy poverty. A number of economic challenges in the late 2010s and early 2020s, including the economic fallout from the COVID-19 pandemic, complicated the implementation of these plans.
Industrialized Countries
Energy poverty in industrialized countries is also referred to as fuel poverty. In contrast to energy poverty in developing countries, fuel poverty in the developed world is the result of strictly economic causes.
The leading research on energy poverty in developed countries has been conducted in the United Kingdom, where the problem has been known since the early 1990s. The term energy poverty is applied to households where fuel costs surpass the national median and their net income would be below the country's poverty line. In addition to space heating, energy expenses for water heating, lighting, electric appliances, and cooking are taken into consideration to define energy poverty.
Until recently, energy poverty has rarely been seen as an issue in most industrialized nations. With an increasing number of households struggling to pay for their energy needs, however, the subject has garnered more attention. Today, energy poverty exists in many industrialized countries with different social systems, from the United States to the United Kingdom to Romania. Energy poverty results from a combination of factors in these nations, including rising energy prices, the poor energy efficiency of older properties, and increasing proportions of the population with low household incomes. Efforts to increase energy efficiency and promote renewable energy use have begun to overlap with those to close the energy poverty gap.
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