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CHAPTER 1
Introduction
The Poor people's energy outlook seeks to understand and communicate the real experience of people living in energy poverty, and show how people's lives can be changed by energy access. 'Energy access' is used as shorthand in this report for the 'use of modern energy services by unserved and underserved people'.
By understanding the ways in which energy poverty locks people into a cycle of wider poverty, the PPEO seeks to stimulate more extensive, effective, and concerted action to end the injustice of energy poverty. By illustrating the change when access is achieved, the PPEO shows that an end to energy poverty is possible – and the ways in which the target of universal access to energy by 2030 can be made real.
In order to develop this perspective, the testimonies of people living in energy poverty have been brought together with perspectives from practitioners with decades of experience working to create access. Lessons from projects have been compared with internationally collected data. Where there is no available data, processes have been proposed to collect it. The PPEO seeks to connect the experience of a single family with analysis of the overall system that continues to fail that family, trapping them in energy poverty.
"The PPEO seeks to connect the experience of a single family with analysis of the overall system that continues to fail that family"
The global challenge
The failure to provide energy access continues in many parts of the world today. Figures 1.1 and 1.2 illustrate the scale of the issue in the two dimensions of energy poverty, which are collected at an international level today: access to electricity and access to 'modern fuels'. They contrast the business as usual trajectory with the 2030 Universal Energy Access target, in absolute numbers rather than percentages, enabling population growth to be taken into account. Figure 1.1 illustrates the case of electricity.
Although progress is being made on electricity access overall, this is not consistent across continents. Particularly in sub-Saharan Africa, new connections are failing even to keep up with population growth. While percentages of people without access to electricity in sub-Saharan Africa (PPEO 2010) were projected to decline by 10 per cent between 2000 and 2015 compared with business as usual, the graph of absolute numbers presented here shows an increase of 100 million people in the period to 2030. This means that with no substantial changes in current policies and practices, the total number of people without access to electricity in sub-Saharan Africa will increase to 691 million by 2030.
Smail Khennas, Independent Energy Expert
The picture in terms of cooking fuels is even worse than that for electricity. As Figure 1.2 shows, more people are being born each year than are getting access to so-called 'modern fuels' (liquid or gas cooking fuels) for cooking. On current projections, by 2030 around 200 million more people will cook on traditional fuels than today, with increases in both Africa and South Asia. While use of woodfuel in itself does not constitute energy poverty in the PPEO definition of Total Energy Access (see Chapter 3), an ongoing reliance on traditional fuels makes requirements for improved appliances and ventilation ever more important if the human and environmental impact of this practice is to be positive.
In order for universal energy access to be achieved, about 150 million more people per year must get lifetime access to clean cooking facilities and about 75 million people per year must get access to reliable and adequate electricity by 2030.
On current projections for the PPEO drawing together available data, in 2030:
• 3 billion people will still cook with traditional fuels;
• almost 900 million people will not have access to electricity;
• in the next 20 years more than 30 million people will die due to smoke-related diseases;
• many hundreds of millions will be confined to poverty as their incomes are constrained by lack of energy access
Poor people's perspective
It is this last point, the extent to which a lack of energy holds people in poverty, on which this year's Poor people's energy outlook focuses.
The PPEO 2010 sought to delve beneath the macro-figures on access to electricity and modern fuels to describe the real experience of energy poverty and access. This perspective used energy services at point of use, as well as a qualitative index of energy supply, as better reflections of access than 'connection' (however intermittent) to the grid, or access to 'modern fuels', while a range of improved appliances exist to use wood in a healthier and more sustainable way.
This perspective resonated with many people worldwide and building on feedback – including via an e-consultation held with GIZ on the HEDON platform (www.hedon.info/forum18) and piloting in three countries – this year an update is proposed to the Total Energy Access (TEA) standards and Energy Supply Index (ESI) inChapter 3. As part of the update, it was recognized the TEA standard applied most to household energy access, and that the treatment of energy for productive uses in enterprises and in shared community services should be expanded.
Figure 1.3 illustrates the overlapping energy access units of: the household, the enterprise, and the community. Members of a household have energy needs for basic services as defined by the TEA Minimum Standards. Each household however also has to earn income and whether that takes place in the household, in a field, or in an office or workshop – that enterprise activity also needs energy. Finally both households and enterprises exist within a community, which requires energy for shared services used by all, including schools, health centres, telecommunication networks, and street lighting.
Energy access for earning a living via enterprise activities, from cottage industries to jobs in larger firms, is the theme of this year's PPEO. Although some enterprise activities are done in the household, and the basic supplies of fuels, electricity, and mechanical power remain the same, the services required can often be different, and the amounts of energy required are not governed by human rights or health, but by the success and scale of the enterprise. Chapter 2 explores the ways in which energy poverty compounds income poverty, and how energy access can be converted into improved incomes.
It is proposed that the next edition of the PPEO will take as its focus the unit of energy for community services, and in this way, after consultation and agreement, complete the set of scales of analysis of energy access in the dimensions which matter to poor people, whether they are in urban or rural locations, and whether they are in a hot or a cold climate. Although contexts differ, there is an important universality to the experience of energy poverty.
Changing the system
That universality also extends to many of the challenges and levers in achieving energy access. In Chapter 4, we seek to put the energy poverty of each individual household, enterprise, and community in the context of the ecosystem that is failing to address their needs. We develop a picture of a healthy energy access 'ecosystem' in which more and more actors serve the energy needs of poor people via the full range of energy resources, equipment, and appliances. And we learn from the policy, financing, and capacity building approaches that have worked in different parts of the world, to make recommendations for the course correction needed if energy access is to be achieved.
Total Energy Access is the destination, improving energy access ecosystems is the way to get there. The final section describes what you can do to help make that happen.
CHAPTER 2
Energy for earning a living
For billions of the world's poorest people, the ability to earn a living depends heavily on access to energy. Having lighting after dark so a shop can stay open for longer, or fuel for an engine to mill grain or a pump to irrigate land, can be the difference between earning a decent livelihood or not, between escaping a subsistence lifestyle and the cycle of poverty, or not. It is this direct connection between energy and poverty reduction, the first Millennium Development Goal, that is typically amongst the most mentioned in discourses on energy poverty, but the least understood in practice.
Certainly the connection between energy and economic activities is widely recognized, with a strong correlation between per capita energy consumption and GDP – although the direction of causality remains in debate (Ozturk, 2010). The constraint of lack of affordable and reliable energy is also clearly felt at national levels, with more than a third of economies in the developing world citing lack of reliable electricity as the top elemental constraint on enterprise growth. Interviews with business leaders in Africa for example have concluded, 'There is perhaps no greater burden on African firms than the lack of a reliable supply of electric power.' (CGDEV, 2009)
However to understand the impact of energy on poor people's ability to earn a living and escape poverty, it is not enough to look at national economic statistics and energy consumption, or even those of large enterprises. Poor people's incomes and enterprises are generally not well reflected in national statistics, including GDP. Paradoxically, greater energy access in enterprises can sometimes produce threats, at least in the short term, to poor people's ability to earn a living, displacing traditional employment opportunities. Equally, a job for a company only delivers 'decent employment' if wage levels are above that designating the working poor. While income is an important dimension, it must also be understood alongside health and safety conditions at work, as well as factors such as income security, benefits, and risk ownership.
To understand the impact of energy access on the ability of poor people to earn a living, the PPEO has focused first on the ways in which poor people currently earn a living – and then looked at how these opportunities may be expanded and enhanced, or in some cases reduced, by energy access.
The PPEO 2010 identified the basic connections between energy access and earning a living as being via one of three mechanisms:
• creating new earning opportunities not possible without energy access;
• improving existing earning activities in terms of returns by increasing productivity, lowering costs, and improving the quality of goods and services;
• reducing opportunity costs, reducing drudgery, and releasing time to enable new earning activities.
It was also recognized that energy access did not automatically create any of these outcomes, and that there were a series of steps between energy access having been created, and impacts on earnings and development outcomes.
This year, in the following chapter, the PPEO explores these three mechanisms and the steps connecting energy access with earnings and development in more depth, by looking at how energy interacts with the four principle ways in which poor people earn a living: earning off the land, running a micro or small enterprise (MSE), getting a job, and – on the supply side of the energy access system – earning from supplying energy.
It is recognized that individuals and households are often involved in one or more of these livelihoods activities to earn a living, and indeed that these categories overlap to a degree – a farm for example is a particular type of micro or small enterprise. However, it is proposed that this categorization enables a useful analysis of how energy interacts with the earning opportunities that are available to poor people.
Energy and earning off the land
Agriculture contributes significantly to the economic and social makeup of the vast majority of developing countries. Increased agricultural productivity is a primary driver for food security, income generation, development of rural areas, and therefore global poverty reduction. Agriculture provides foodstuffs and drinks, produces animal feeds and products, and also delivers a wide range of non-food goods and services, including fibres for clothes and fuel, in the form of biofuels.
Some 2.5 billion people, 45 per cent of the developing world's population, live in households depending primarily on agriculture and the agri-based economy for their livelihoods. In agriculture-based countries, the agricultural sector generates on average 29 per cent of gross domestic product (GDP). However its impact on employment is even more marked, accounting for 65 per cent of the labour force, with a disproportionate number being income and energy poor (GIZ, 2011).
Poor people participate in agriculture as smallholder farmers or as farm labourers on other people's land – and some do both at different times of the year. In India, statistics from 2001 show 54.4 per cent of agricultural workers were cultivators (smallholder farmers) and 45.6 per cent were labourers, compared to 62.5 per cent and 37.5 per cent respectively in 1981 (Directorate of Economics and Statistics, 2006).
Improved agricultural practices are a priority for tackling poverty today, and for meeting future generations' needs. It is estimated that an increase of 70 per cent in agricultural productivity is required by 2050 to feed the 9 billion people expected in the world (FAO, 2009). Greater agricultural productivity requires improvements in agricultural production, agro-processing, post-harvest and storage facilities, and distribution and retail – and this requires energy inputs at each stage of the agro-food production chain (see Figure 2.1).
Figure 2.1 outlines the wide variety of activities that require energy in the agricultural value chain. A number of energy services available in poor households, including lighting, cooking, and ICTs, enable some of these activities. Many of the activities however require specific energy services accessible only with an increased level and quality of supply, and specific equipment, appliances or knowledge. Whilst the energy supply is an important component, clearly many other resources and assets are required – including land, water, seeds, and equipment.
Improved agricultural practices can enable poor farmers to:
• increase productivity and yields;
• provide better quality and quantity products at less time, effort, and wastage, through better processing and storage;
• earn more from produce through new market opportunities and access to information and networks.
For poor farmers to achieve this and realize higher incomes as a result requires an improved quality of energy supplies, an increase in the amount of energy used, and access to a wider range of energy services.
Increasing productivity
For poor farmers, agricultural production activities are still based to a large extent on human and animal energy, as there is often insufficient mechanical, electrical, and chemical (fuels) energy available. Mechanical power is a particularly important input in any farming system, used in land preparation, planting, cultivation, irrigation, and harvesting.
Three distinct levels of farm-power systems can be identified according to the relative contribution of humans, draught animals, and machinery (GIZ, 2011):
1. Basic human work for tilling, harvesting and processing, together with rain-fed irrigation.
2. Use of animal work to provide various energy inputs. (Neither level 1 or 2 involves direct energy input from an external fuel source, although indirect energy input is needed for the production of food for human consumption, animal feed, and cultivation inputs like fertilizers and herbicides/pesticides where used).
3. The application of renewable energy technologies (e.g. wind pumps, solar dryers, water wheels, biomass conversion technologies), fossil fuel-based technologies (e.g. diesel engines and pumps) or hybrid systems (a combination of both) for motive and stationary power applications and for processing agricultural products.
Figure 2.2 shows how the proportion of land cultivated in all developing countries by the three different power sources in 1997/99 was broadly similar: 35 per cent was prepared by hand, 30 per cent by draught animals, and 35 per cent by tractors. The proportions however vary between regions with sub-Saharan Africa in particular characterized by high rates of human and animal cultivation, and only 10 per cent of farm area served by tractors (FAO, 2003).
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Excerpted from "Poor people's energy outlook 2012"
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