2.1.1 Poverty

people living in poverty pay a higher price per unit of energy services than do the rich

Poverty is indisputably among the world’s largest, most urgent and most fundamental issues. Despite this, poverty has received scant attention from an energy perspective. This neglect of the poverty-energy nexus is most surprising since energy is of vital importance to the satisfaction of basic needs, particularly nutrition and health.

A large proportion of humanity does not enjoy the benefits that modern energy sources and devices bring. About 2 billion people still cook using traditional fuels, and 1.5-2 billion people are without access to electricity.

Energy services constitute a sizeable share of total household expenditure in developing countries. People living in poverty pay a higher price per unit of energy services than do the rich. They also spend more time obtaining these energy services. The substitution of modern energy carriers and more efficient energy conversion devices would confer sizeable gains in purchasing power on poor urban households. Improvements in energy efficiency have considerable potential to reduce poverty in all of its key dimensions, and to facilitate development.

improvements in energy efficiency have considerable potential to reduce poverty

Patterns of energy consumption among people living in poverty tend to further worsen their misery. Firstly, because these people spend a higher proportion of their income on energy, they are less likely to accumulate the investments necessary to make use of less costly or higher quality energy sources. Secondly, the use of traditional fuels has a negative impact on the health of household members, especially when burned indoors without either a proper stove to help control the generation of smoke, or a chimney to vent the smoke outside.

Policies and programmes that directly address the creation of opportunities for people living in poverty to improve the level and quality of their energy services (by making more efficient use of commercial and non-commercial energy and by shifting to higher quality energy carriers) will allow the poor to enjoy both short-term and self-reinforcing long-term improvements in their standard of living. By contrast, the standard poverty-alleviation strategies - macro-economic growth, human capital investment, and redistribution - do not focus on the energy-poverty nexus in developing countries. If energy is left out of poverty elimination strategies, such as those promised by the Copenhagen Social Summit, these strategies are doomed to fail.