A global perspective on fuel poverty

Nick Butler provides a very good blog on the Financial Times website about the importance of energy and yet, according to the most recent forecast from the IEA, almost a billion people will still lack electricity in 2030. It is in everyone’s interest to change that. What do you think?

 

Energy poverty, the plight that a billion people need not endure

For one person in six, worldwide energy is not a tradeable commodity but a matter of survival — and it takes the form not of electricity from the socket or petrol from the pump but wood or dung collected by hand.

The number of people living and dying in conditions of absolute poverty is falling — but only slowly, because population growth, especially in sub Saharan Africa, cancels out many of the gains being made elsewhere. According to the most recent forecast from the International Energy Agency, almost a billion people will still lack electricity, even in 2030. That number could be higher still if recent forecasts of population growth in Africa and India prove to be right.

We should be more shocked by these facts than we are. Over the past three decades, the Chinese have succeeded in lifting hundreds of millions out of poverty and subsistence — a remarkable and unprecedented achievement. We are now within sight of the time when no one in China will lack access to proper energy supplies, even if the use of primitive cooking stoves remains a problem. There is no reason why this success should not be repeated elsewhere.

Eliminating energy poverty does not have to rely on governments with Beijing’s level of centralised authority. Developing countries including Kenya, Uganda and Tanzania are tackling energy poverty in rural areas, where more than half the villagers have no connection to the electricity grid. Power can come in different ways, from pico-power systems that can generate just 0.01kW (enough for lighting and simple two-way mobile links) to standalone home systems or local grids. The smaller systems are predominantly solar powered; the bigger ones can also use hydro, wind and biomass.

Power transforms lives in many ways. Households can have access to clean water, and communications systems can link the most remote villages to web-based health systems. Most important of all, accessible power can help create productive enterprises and the potential for exchange and trade.

Smart Villages , a book from the Cambridge Centre for Development Studies, spells out just how much could be done. Of course money matters, but this is not particularly about aid. The challenge is much more about organisation to give people the opportunity to use the technology that is already available. A crucial element is finding a viable financial mechanism that can help families and villages to get the equipment and to pay back the cost out of the revenue it can generate. This is a matter of spreading risk, creating revenue flows and of developing a system to collect payments in communities completely unaccustomed to financial transactions. Complex yes, but surely not impossible.

The banks could help but perhaps the energy companies could do more. The solar companies have a direct interest but in most cases do not have the capital on the scale required. For the bigger energy companies the calculation of self-interest is more complicated.

Companies are understandably wary of taking on roles that they believe are really for governments. But corporate strengths can be used for the greater good. I can think of many companies where staff would be happy to devote part of their own time, and even their own money, to a well-designed scheme that helped relieve energy poverty.

It has started to happen but the issue goes beyond charity and is really a matter of enlightened self-interest. Companies need secure environments in which to operate and wide social divisions do not make for stability. Most of the growth of the energy business, including the power sector over the next half century, will take place in the emerging markets of the world — often in places where growth and economic progress live uncomfortably side by side with persistent poverty. It cannot afford to settle for living in gated communities.

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