The world is at a cross point today due to unprecedent crises and multiple ongoing conflicts. One out of a myriad of consequences of these negative events is energy poverty which, now at its highest recorded rates, has far-reaching social and economic impacts on household wellbeing. The COVID-19 pandemic has exacerbated acute inequalities among households in terms of access to energy. With energy prices having constantly grown since September 2021, the inequalities between the wealthiest and the most vulnerable have become more serious and visible. We asked international experts what they think about energy poverty, its consequences and possible solutions.
Key Takeaways:
- The International Energy Agency estimates that around 2 billion people worldwide are experiencing energy poverty.
- Energy poverty rates have soared due to COVID-19 as individuals stuck at home were unable to pay energy bills, lived in an unhealthy environment or received disconnection notices.
- According to energy experts, the three main causes of energy poverty are low incomes, poor housing quality, and high fuel costs.
- Aviation, shipping, and chemical firms are directly impacted by higher energy prices. The food industry, travel agencies, and hospitality are impacted by second-round effects as a consequence of energy crisis.
What are the causes of the latest energy poverty rates increase?
“Energy poverty is multi-dimensional and should capture contextual indicators in geography with socio-economic biases. The COVID-19 pandemic coupled with the recent Russia-Ukraine geopolitical turmoil has brought major disruptions to the global energy system. This ‘bundle’ has affected the energy sector and its sustainability that, in turn, have led to inflated energy prices and dwindling household incomes (primarily due to loss of employment), and energy inefficient usages versus the performance of buildings and an increase in utility bills. These downstream influences have exacerbated the energy poverty rates as vulnerable households, particularly low-income families, have been unable to pay their energy bills. These combined effects on energy sustainability have shaped an unprecedented condition for affordable and reliable, and environmentally sound energy services to sustain economic and social equilibrium.
“Today, increasing energy poverty has several reasons behind it. The main ones are the COVID-19 crisis that has already compounded poverty into extreme poverty, the high global prices of primary fuels and lousy public energy policies in most countries. The pandemic aggravated every area and sector of probably every country, mainly vulnerable people. Furthermore, the awful energy public policies do not comply with the promises of the 2030 Agenda for Sustainable Development in some countries.
“In my view, access to energy is a prerequisite of human development in any country. Energy poverty represents one of the great challenges of this century, and it involves expanding modern energy access to literally hundreds of millions of households while also attempting to minimize greenhouse gas emissions and provide energy services that are affordable and just. The dimensions of energy poverty, such as energy-related financial stress, are distinct from poverty in general and include causes, effects, and policy solutions. The three main causes of energy poverty are low incomes, poor housing quality and high fuel costs, underpinned by social, health and economic contributors (Baker et al., 2018). In addition, Middlemiss and Gillard (2015) identified tenancy relationships as contributing to energy poverty. Energy poverty also has distinct health implications that relate to home temperatures. Specific policy to target energy poverty includes home energy efficiency improvements and approaches to overcome tenant-landlord conflicts and interactions which are now one of the common social issues globally.”
“The COVID-19 situation has had a drastic economic impact on every country including Papua New Guinea. This precarious situation has been exacerbated by the Russian-Ukraine war, especially in relation to the global energy supply. Consequently, the cost of crude oil has increased resulting in dependent sectors such as energy and transport in PNG experiencing the cascading impacts. Having said this, energy poverty in PNG has always been an issue due to ambiguous and overly ambitious policy aspirations, and barriers in the form of technical (human resources and technologies), political, financial (appropriate funding), economic and geography.”
What are the main consequences of this energy crisis? Which are the most affected sectors?
“Recent global supply disruptions and high energy prices continue to influence the deepening energy crisis worldwide. Economies have experienced energy-driven inflation, exacerbating income inequalities and lost growth and production affecting the most vulnerable people through constrained household budgets, increasing food shortages and energy poverty, and increasing socio-economic disturbances and social unrest. The rise in the global cost of living threatens to push more people into food insecurity and poverty. Most industrial sectors are energy-intensive. The effects of soaring energy prices are already being felt by almost all sectors. Aviation, shipping, and chemical firms are directly impacted by higher fuel costs. The food industry is also under fire as the raw materials it gets from farmers has become more expensive due to rising fertilizer and diesel costs. Travel agencies also purchase a lot from energy-intensive sectors such as aviation and road transport.
“The high prices of coal, electricity, natural gas, and oil, added to the war between Ukraine and Russia have caused the global energy crisis we witness. Its main consequences are galloping inflation around the world, uncertainty, and economic and political instability. The sectors most affected by the energy crisis are agriculture, health, manufacturing, transport, and public services because they are primary necessities for the people.”
“The energy crisis is a result of many different strains on our natural resources, not just one. There is a strain on fossil fuels such as oil, gas, and coal due to overconsumption – which then, in turn, can put a strain on our water and oxygen resources by causing higher carbon emissions and air pollution. Most economies around the world are facing a deepening energy crisis – due to global supply disruptions, high energy prices, geopolitical turmoil, and an as-yet-unrealized energy transition away from carbon-intensive sources. The effects of soaring energy prices are being felt by almost all companies. Aviation, shipping, and chemical firms are directly impacted by higher energy prices. The food industry, travel agencies and hospitality are impacted by second-round effects as a consequence of energy crisis.”
“Increases in fuel prices affect the transport sector in the country (Papua New Guinea). The energy sector has been affected as well because several power-producing companies depend on heavy fuel oil to produce electricity.”
What are the possible solutions to reduce energy poverty?
Sustainable energy is the catalyst for transitioning into reducing energy poverty. The focus should be on fragile economies, expanding modern energy access to households, and providing energy services that are affordable and fair. While the emergence of the provision of clean energy services is promising, the opportunity to move vulnerable households out of energy poverty as suggested by literature, however, rests upon provisions to increase income, regulate energy pricing, reduce home energy usage with energy efficiency, and use domestic renewable energy sources such as biomass and small hydropower.
“There is no unique solution to reduce energy poverty because it is a complex issue. The Government can reduce energy poverty through public energy policies and long-term energy diversification and produce energy at affordable prices and cleanliness. Enterprises can hire vulnerable people and support the Government by implementing new energy technologies in some public programs. NGOs can evaluate the social impacts of reducing energy poverty and training vulnerable people in energy technologies or their implementation. Academia can offer scholarships to the poor to improve their quality of life. These are just ideas, but evaluating the problem and its context is necessary.”
“The best possible solution is to reduce the world’s dependence on non-renewable resources and to improve overall conservation efforts. Much of the heritage of the industrial era was created using fossil fuels, but there is also known technology that uses other types of renewable energies such as steam, solar, and wind. In the absence of such initiatives and referring to research documents, four possible ways to move vulnerable households out of energy poverty are: (1) increase income, (2) regulate energy pricing, (3) reduce home energy usage with energy efficiency, and (4) use domestic renewable energy sources such as biomass, small hydropower and solar energy.”
“Practical policy and regulatory frameworks to support the accelerated deployment of renewable energy technologies, governments’ funding commitments and intervention, capacity building (both in terms of technology or systems/process and human resources) and empowering the people to invest in renewable energy.”
See also: Will Russia’s invasion of Ukraine fast-track the energy transition? | Experts’ Opinions
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