Overcoming the contemporary malaise of energy poverty

Energy poverty is a persistent and pervasive issue that affects both industrialised and developing nations. The association between energy and poverty is derived from the absence of modern energy services, such as electricity and clean cooking facilities. According to the International Energy Agency, some 770 million people worldwide continue to lack access to electricity.

Energy is one of the essential components for any nation to function properly and any major deficiency in it can create a bottleneck on socioeconomic progress. According to a 2007 research data, more than half of the world's population resides in rural regions, where they mostly rely on biomass for energy and lack access to more contemporary forms of energy. 

For example, in Bangladesh, kerosene, electricity, candles, biomass fuels, and LPG (liquefied petroleum gas) are the main sources of energy for rural homes. Bangladesh's overall primary energy supply is only around 26% of what is provided by biomass fuels, according to the Hydrocarbon Unit of the Energy and Mineral Resources Division report 2020-21.

As per the research paper "Does culture affect energy poverty? Evidence from a cross-country analysis" published in 'Energy Economics' in 2021, energy poverty is highly affected by cultural dimensions. Due to the country's rainforest, ecological system, and biological diversity, it possesses a vast amount of biomass assets, including animal waste, crop silt, jute stock, sugarcane residue, etc. Rising energy consumption places tremendous strain on available biomass. The key obstacles to converting biomass energy into more advanced energy forms in the near future are most likely to be low per capita income and limited economic growth. As a result, the nation is projected to continue to rely largely on biomass resources for its energy needs in the foreseeable future. Bangladesh's energy mix is predominantly dependent on fossil fuels. For example, it primarily relies on natural gas for the production of power. This defies any decarbonisation efforts. 

Majority of the rural citizens in this country cook using biomass and utilise either grid electricity or kerosene as their primary source of energy purchase for illumination. Only 6% of the overall population, mostly in metropolitan areas, have access to natural gas while the supply of it is up to 70% as can be seen from Figure 1. The supply of other fuels is not as high as natural gas. 

Bangladesh's primary sources of power production are coal, natural gas and heating oil. Due to the rising fuel imports and the substantial reliance on coal and gas for the production of power, this raises questions about the security of the energy supply.

The longstanding problem of Bangladesh is the country's inability to satisfy the demand for power. 

Table 1 shows how a rise in (per capita) income coincides with a higher energy use in Bangladesh. According to a  2021 "Energy poverty, health and education outcomes: Evidence from the developing world" paper published in Energy Economics, energy poverty is often defined as spending on energy equal to 10% of a household's income, and any household with spending on energy beyond this threshold is considered to be energy poor.

In order to assist those who are energy poor, it can be helpful to prioritise energy policies and investments. A policy mechanism used to encourage investment in renewable energy sources is the 'feed-in tariff'. This often entails guaranteeing small-scale energy producers an above-market price for the energy they supply to the grid, such as solar or wind energy. Although solar energy is a popular alternative to fossil fuels, it does incur high costs and households would most likely produce more than they consume. In this case, 'net metering'—a billing system for energy that allows users to utilise their own electricity whenever they choose, rather than only at the time it is created—can be employed in Bangladesh.

Understanding the fundamental demand for energy can be very helpful in determining the energy policies and investments that should be prioritised to combat energy poverty. More importantly, by adopting enhanced biomass stoves, more contemporary sources of cooking energy, and biogas solutions, family cooking demands may be fulfilled more effectively. Improved stoves consume less fuel, which lowers the high opportunity cost of gathering fuelwood and the expense of buying biomass fuel. 

Liquefied Petroleum Gas (LPG) helps in minimising the health risks related to exposure to high levels of indoor air pollution in rural families. Due to the physical challenges of reaching more rural places and potential income shortfalls, expanding the national grid to some population segments may not be financially sensible. Whilst both feed-in tariff and net metering are latent with benefits, they have their own limitations. The secret to reducing poverty and promoting climate-friendly economic growth may lie in a more resolute effort to help the underprivileged in using fuels in more sustainable and efficient ways.

Encouraging green and low-carbon transport infrastructure and vehicles can curb the problem of regional disparities and uneven access to energy. Off-grid electrification based on renewable energy technology (such as solar household systems) may be a practical solution in this situation, at least in the near term. 

Fortunately for Bangladesh, the government has effectively met that requirement, installing approximately 6 million solar household systems (according to a PV magazine article) in a short period of time with assistance from international development and donor groups. Bangladesh now needs to improve institutional coordination on all fronts and reach a critical mass of technological and market growth. Furthermore, targeted subsidies can lead to more efficient use of biomass energy, access to modern energy, formulating Research and Development (R&D) programs and investing in innovation in sustainable energy are robust ways in which this country can alleviate energy crises. 

Bangladesh's share of fossil fuel deposits are evidently insufficient to power the continuing large-scale development projects. Hence, both public and private sectors end up relying on environmentally destructive forms of energy. As such, economic development and environment protection have sadly become two incompatible agendas. The continued and uninterrupted supply of energy at a reasonable cost is a major priority.  Additionally, the nation is often faced with catastrophic impacts of global warming and climate change. 

In conclusion, it is imperative to foster an effective transition to clean energy and climb out of poverty when it comes to access to energy.

Shaniz Chowdhury. Illustration: TBS

Shaniz Chowdhury is currently pursuing a Bachelor's Degree in Economics from Brac University