Sustainably Reducing Energy Poverty

[et_pb_section bb_built=”1″][et_pb_row][et_pb_column type=”4_4″][et_pb_text _builder_version=”3.1.1″]

Dr. Johanna Choumert Nkolo

There is a growing appetite for evidence on how to end energy poverty. The United Nations Sustainable Development Goal 7 “Ensure access to affordable, reliable, sustainable and modern energy for all” by 2030 and the Sustainable Energy for All initiative (SEforALL) are significant steps in this direction as they aim to eradicate energy poverty and transform global energy systems to contribute to universal prosperity

Bold action to end energy poverty could deliver massive benefits for human settlements and ecosystems, including benefits in terms of health and education outcomes, gender equity, climate action, biodiversity conversation, job creation, and poverty reduction.

[/et_pb_text][/et_pb_column][/et_pb_row][et_pb_row][et_pb_column type=”1_2″][et_pb_text _builder_version=”3.1.1″]

More than one billion people worldwide do not have access to electricity. 2.8 billion people still rely on biomass, charcoal or kerosene as their main cooking fuel. The African continent clearly lags behind the rest of the world and is particularly affected by the energy gap. Globally, modern renewable energy only represents 10% of total final energy consumption; and, despite global energy intensity improvements, progress remains below targets (International Energy Agency).

[/et_pb_text][et_pb_image _builder_version=”3.1.1″ src=”https://edi-global.com/wp-content/uploads/2018/12/Pixnio-wind-farm-1.jpg” title_text=”Pixnio” /][/et_pb_column][et_pb_column type=”1_2″][et_pb_image _builder_version=”3.1.1″ src=”https://edi-global.com/wp-content/uploads/2018/12/429846.jpg” title_text=”UN Photo/Sophia Paris” /][et_pb_text _builder_version=”3.1.1″]

In both low and high-income economies, energy poverty, sustainability and energy transition are intertwined. For instance, 13% of French households suffer from energy poverty, where energy poverty mainly results from a combination of three factors: low   household income, poor thermal insulation of dwellings, and energy costs.

[/et_pb_text][/et_pb_column][/et_pb_row][et_pb_row][et_pb_column type=”4_4″][et_pb_text _builder_version=”3.1.1″]

As part of my ongoing research, I am engaged with the REVE Sustainably Reducing Energy Poverty (Réduction soutenable de la pauVreté Energétique) to investigate energy production and energy consumption within the context of developing countries.   This blog post gives the views of the author, and not the position of the EDI Group. The most recent findings of this research programme are included below.

In view of the magnitude of these global challenges, with an international group of environmental economists (from various research centres including ArtDev, CERDI, CREM, and IREGE), we have been working for four years (2015-2018) under the research programme REVE Sustainably Reducing Energy Poverty (Réduction soutenable de la pauVreté Energétique). This research programme was funded by the French National Research Agency (ANR), under the project number ANR-14-CE05-0008, and was coordinated by Pr. Aude Pommeret from IREGE.

REVE is an innovative and strategic research programme that has worked collaboratively to develop an understanding of energy poverty. We generated theoretical and empirical evidence to reduce energy poverty both in low- and high-income economies in the context of pollution and climate change and also proposed economic policy instruments to address these challenges. We have identified four work streams allowing us to fill in the gaps in the literature:

We used complementary approaches, including theoretical modelling, econometric modelling, stylised macroeconomic growth models with pollution, microeconomic models of the industrial organisation theory, and numerical simulations to generate evidence and economic policy recommendations, aimed at both reducing energy poverty and providing environmental regulation.

More than twenty working papers and published papers were authored as a result of this project, some of which are listed at the end of this post.

What are our main findings?

Workstream 1: Energy poverty in France, solutions and consequences for pollution

• The probability of falling into energy poverty is higher for those who are retired, live alone, rent their homes, use an individual boiler for heating, and cook with butane or propane.
• Tenants are doubly penalised: they have high energy bills because of energy inefficient housing and – since they are poorer than landlords – they are unable to invest in systems that would allow them to save energy.
• Tax cuts are ineffective in a context of divergent incentives between tenants and landlords. A social tariff for energy does not seem to significantly reduce fuel poverty.
• Energy efficiency measures are not sufficient. Governments should focus more on monetary poverty and consider subsidising renovation costs as a potential solution to energy poverty.

Workstream 2: Energy poverty, pollution and development at the macroeconomic level

• Reducing pollution by limiting the use of abundant fossil fuels in developing countries could halt economic development, and thus ultimately lead to persistent environmental damage, as well as lower levels of consumption.
• Policies in favor of biofuels have positive impacts on GDP and household incomes. However, there exists a positive relationship between bioethanol production and deforestation in developing and emerging economies.
• Pollution has severe impacts on the wealth of urban Chinese households, directly via the concentration rate of particulate matter in the air and indirectly via the effect of pollution peaks on education.
• A European carbon tax (20€/ton) increases inequalities between countries, in terms of tax revenue/GDP ratio and/or abatement effort. Compensatory transfers would represent, on average, 5% of the cost of the European Union’s energy and climate package and would increase acceptability of environmental policies.

Workstream 3: Energy poverty, pollution and development at the microeconomic level

• In rural Nigeria, a technical shock such as electrification increases husbands’ working time without altering that of wives’.
• The use firewood is the most important cause of deforestation in many developing countries. Wood collected in rural areas is partially (about one-third) used by people living in neighboring cities, with consequences for energy policy and pollution.
• Tanzanian households stack-up the energy ladder, i.e. even when they adopt modern energy sources, they still use charcoal, firewood and kerosene, which has implications in terms of household health but also in terms of the efficiency of energy or environmental policies
• Biofuel policies in the United States have led to an increase in global food prices, which has implications for poverty and the well-being of households in developing countries such as India.

Workstream 4: Access to Clean Energy

• The energy gap in low income economies and congested electricity grids in high income economies can be mitigated by increased reliance on renewables.
• The possibility to sell to the electricity grid, the installation of smart meters and energy storage capacities should be integral parts of energy policies to cope with the intermittent nature of renewables
• The first dynamic model of the optimal transition from fossil fuels to renewables in electricity generation is proposed, taking into account the (predictable) variability and (unpredictable) intermittency of renewable energy sources and the storage potential.
• In assessing the extent to which variability and intermittency are actually a serious barrier to transition, variability has an important role, while intermittency may only marginally affect the energy transition.

The primary contributions of the REVE research programme lie in reviewing the issue of sustainable reduction of energy poverty in both low- and high-income economies and in growing strategic partnerships between several research centres working on these global challenges.  Now, what’s next? Whatever the economic context, the issue of reducing energy poverty is intrinsically linked to climate action and health and must therefore continue to mobilise research efforts. In our view, future research should notably focus on (i) energy transition and intermittency, (ii) health and indoor pollution issues and (iii) mobility poverty.

Note: This blog post gives the views of the author, and not the position of the EDI Group.

About the Author: Dr. Johanna Choumert-Nkolo is the Head of Research at EDI. Her publications are accessible here.

References

1. Charlier, D. (2015). Energy efficiency investments in the context of split incentives among French households. Energy Policy, 87, 465-479.
   keywords: energy efficiency; split incentives; energy burden; tax credit; public policy
2. Charlier, D. (2018). Décisions d’investissement en efficacité énergétique dans le secteur résidentiel: incitations et obstacles à la rénovation. Revue économique, 69(2), 335-366.
   keywords: energy efficiency; housing sector; energy savings; multivariate tobit model; public policy
3. Charlier, D., Risch, A., & Salmon, C. (2015). Les indicateurs de la précarité énergétique en France. Revue française d’économie, 30(4), 187-230.
   keywords: fuel poverty; indicators
4. Charlier, D., Risch, A., & Salmon, C. (2018). Energy burden alleviation and greenhouse gas emissions reduction: Can we reach two objectives with one policy? Ecological Economics, 143, 294-313.
   keywords: energy burden; public policies; bottom-up simulation; energy consumption; GHG emissions
5. Choumert-Nkolo, J. (2018). Developing a socially inclusive and sustainable natural gas sector in Tanzania. Energy Policy, 118, 356-371.
   keywords: extraction industries; energy; corporate social responsibility; benefit sharing; social licence to operate; sustainable development
6. Choumert-Nkolo, J., Motel, P. C., & Djimeli, C. G. (2018). Income-generating Effects of Biofuel Policies: A Meta-analysis of the CGE Literature. Ecological Economics, 147, 230-242.
   keywords: biofuel policies; income generation; meta-regression; computable general equilibrium models
7. Choumert-Nkolo, J., Combes, P., & Le Roux, L. (2019). Stacking up the ladder: A panel data analysis of Tanzanian household energy choices. World Development (forthcoming).
   keywords: fuel choices; intra-household bargaining; sub-Saharan Africa
8. Dato, P., Durmaz, T., Pommeret, A. (2019). Renewables, Energy Storage, and Smart Grids. In: Hefele P., Palocz-Andresen M., Rech M., Kohler JH. (eds) Climate and Energy Protection in the EU and China. Springer, Cham.
   keywords: climate change mitigation; sustainable development; energy security; environmental policy; EU and China climate collaboration
9. Dato, P., Durmaz, T., Pommeret, A. (2017). Smart Grids and Renewable Electricity Generation by Households. FAERE Working Paper, 2017.09.
   keywords: renewable energy; intermittency; distributed generation; smart solutions; energy storage; demand response
10. Durmaz, T., Pommeret, A. (2018) Levelized Cost of Consumed Electricity. Working Paper
11. Keles, D., Choumert-Nkolo, J., Combes Motel, P., & Kéré, E. N. (9). Does the Expansion of Biofuels Encroach on the Forest? Journal of Forest Economics (forthcoming).
    keywords: biofuel production; land use change; forest cover loss; panel data
12. Legendre, B., & Ricci, O. (2015). Measuring fuel poverty in France: Which households are the most fuel vulnerable? Energy Economics, 49, 620-628.
    keywords: fuel poverty; fuel vulnerable households; poverty indicators; econometric model
13. Salmon, C., & Tanguy, J. (2016). Rural electrification and household labor supply: Evidence from Nigeria. World development, 82, 48-68.
    keywords: rural electrification; labor supply; developing countries; joint decision making; bivariate hurdle model; copulas

[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]