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  • Writer's pictureBait Al-Amanah

A New Look at Measuring Energy Poverty – 3rd Bali International Conference on Social Sciences

3rd Bali International Conference on Social Sciences and Humanities (ICSSH)

Ijlal Hannan participated in the conference held from 7 to 8 August 2018, witnessed a number of interesting papers presented by academicians from all over the globe, one of such is Alexandru Maxim of Alexandru Ioan Cuza University of Iaşi, Romania.

His paper on energy poverty (also known as fuel poverty in existing literature) refers to the inability of households to afford adequate access to energy services. This socioeconomic issue affects a significant number of individuals across the world and has determined the emergence of mitigation policies and targeted governance mechanisms, especially within the European Union.

One of the major issues in adequately addressing energy poverty is connected to correctly defining and measuring the phenomenon. The Compound Energy Poverty Indicator (CEPI) has been compiled and measured across most European countries, taking into consideration factors such as individuals‘ ability to adequately heat, cool or light their home. The use of CEPI has revealed some specific socioeconomic traits that determine the level of energy poverty to vary significantly across European countries (severely affecting Southern and Eastern Europe). However, the indicator itself has shown limitations and can be improved. The current paper proposes measures to improve the regional adaptability and applicability of the indicator using both secondary and primary data. Such improvements may expand the applicability of CEPI beyond Europe, turning it into a valid tool to assess energy poverty across numerous countries and regions.

As a minimum basic level of energy services cannot be measured in an objective and fungible way, many alternative ways of measuring energy poverty have been developed. In this section we review several metrics, categorized by whether the approach to measurement is based on an observation of energy access, the energy input, the outcomes of energy use, or the quality of energy delivered.

Approach 1: Energy Access

Energy access is commonly used as a proxy for energy poverty because of the conceptual difficulties of measuring energy services just described. Energy access is an observation about households’ access to both electricity and cooking fuels. The first component of energy access is electricity access, also called the electrification rate. The electrification rate is defined as the percentage of the population with a connection to an electric network. The second component of energy access is access to modern cooking services provided by liquified petroleum gas (LPG), electricity, biogas systems, or high efficiency biomass cookstoves. The number of households with access to modern cooking is defined as the complement of the percentage of the population that uses traditional fuels like fuelwood, charcoal, crop residues, or dung.

Approach 2: Measuring Inputs

Because of the challenges of measuring energy services and the limitations of using energy access as a surrogate, many scholars have approached the definition of energy poverty through the lens of inputs of energy, measured either in terms of energy consumed or in terms of income spent on energy. The assumption is that if one has energy, then one has energy services. Input based metrics differ based on whether energy consumption is measured in units of energy or units of income and on how the energy poverty line is set. While the energy inputs into a household or an economy can be measured easily and consistently, the threshold that identifies the energy poor is not consistent across time or geography.

Approach 3: Measuring Outcomes

The third approach to measuring energy poverty is based on the outcomes of energy poverty. Implied in this approach is that without modern energy services people will experience bad outcomes, and therefore, if improved outcomes are measured, then energy poverty has been reduced. There are three ways in which the outcomes of energy poverty have been used as a metric. First, the individual impacts of energy use that are characteristic of the energy poor can be measured. For example, one could measure health impacts like the number of respiratory infections or kerosene burns treated.

Alternatively, one could measure environmental impacts like deforestation rates. These measures are problematic because they conflate the dependent and independent variables that might be used to study the efficacy of programs. Second, the outcomes of energy poverty can be measured in terms of opportunity costs. Several dimensions of opportunity cost such as time lost when gathering fuel that may have otherwise been spent at school or engaged in a productive enterprise. The opportunity cost will differ among communities depending on the distance to the source of biomass fuels.

Finally, energy outcomes can be measured in terms of available choice. Poverty is defined by the absence of choices and opportunities to live a basic human life. The focus on choice is based on capability approach to defining poverty, centered around the moral significance of individuals’ “beings and doings” rather than the more common utilitarian definitions. In line with this broader thinking about poverty, the Asian Development Bank has defined energy poverty as the absence of sufficient choice in accessing adequate, affordable, reliable, high-quality, safe and environmentally benign energy services to support economic and human development. By this definition, when a household has a choice to exercise about their energy services, that household has escaped energy poverty. Like energy services themselves, outcomes are not measured in units that can be meaningfully added and interpreted. Data collection for health and environmental impacts is straightforward, but designing data collection for opportunity costs and choice is daunting.

Approach 4: Quality of Energy Delivered

The World Bank developed the Multi-Tier Framework (MTF) to improve upon the simple, binary measure of energy access by assessing the attributes of energy supply as a way to more closely measure the energy services needed to support household and business development. The underlying assumption is that energy services require, not just an electricity connection and not just energy, but a certain quality of energy that can be described by various attributes. If the delivered energy has the prescribed attributes, then energy services are being provided. The MTF is the most sophisticated energy poverty metric based on the quality of energy delivered. The MTF assesses the quality of energy in several domains: household energy, energy for productive uses, and community energy. The household energy index is further divided into electricity, cooking, and space heating. For each type of end use there are several attributes of quality. For example, the MTF assesses electricity based on seven attributes of quality: capacity, duration (including daily supply and evening supply), quality, reliability, affordability, legality, and health and safety. For each attribute a quantitative or qualitative threshold is set establishing five tiers of access. For electricity, Tier 1 access is the provision of 1,000 lumen hours and cell phone charging for at least four hours a day, of which at least one hour must be in the evening. Tier 1 could be met with many solar home systems available today. Tier 5 is 23 hours of reliable electricity, provided legally at a cost of less than 5% of household income. This quality of electricity is not provided by the grid in many countries. The multi-tier index for household electricity has additional parallel assessments. In addition to the seven attributes of electricity quality, there is a multi-tier matrix for annual consumption, daily consumption, and access to energy-intensive energy services. The overall tier assignment is determined by the lowest tier assignment of each of the attributes among the assessments. Like the multi-tier matrix described for electricity there is a multi-tier matrix for cooking, space heating, productive uses, street lighting, health facilities, education facilities, community buildings, and public offices. For example, for cooking Tier 1 requires high air quality and high efficiency. Tier 2 adds a requirement for convenient fuel collection. Tier 4 adds requirements for year round fuel availability and affordability. All of the assessments of energy end uses are aggregated in a simple mathematical average as an index describing energy access in each domain which are then further aggregated to provide the overall energy access index.

In sum the paper assessed the metrics of measuring energy poverty as a guideline to develop government policies that will address the issue of energy poverty on a more informative basis and impactful insight. This is a good step to acknowledge an often overlooked aspect of socio-economic insufficiency across the board.

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