Reducing energy poverty

The challenge of energy poverty is not limited only to developing countries. In developed countries such as Australia, France, the United States and the United Kingdom (UK), over 10 percent of households are energy poor, while in some European countries, energy poverty rates are as high as 40 percent.

Besides the deaths arising from energy poverty, the monetary and socioeconomic costs of energy poverty are also substantial. In the UK, an estimated £1.3 billion per annum is spent on providing health services to elderly people with conditions linked to energy poverty. Energy poverty has also been linked with poorer health and wellbeing with significant implications for productivity.

Factors influencing energy poverty

Income, energy efficiency and energy prices are among the main causes of energy poverty. For instance, with low income and high energy prices, households will be unable to afford energy services. Similarly, households in energy inefficient homes are likely to pay more for energy services. Several other factors including weather patterns, culture, and lifestyle among others, are likely to influence energy poverty. However, because of limited research, we do not have much detail on the antecedents and implications of energy poverty.

Centre for International Development research

In order to influence policy aimed at alleviating energy poverty, RMIT University’s Centre for International Development (CID) researchers are setting the pace in conducting some pioneering research on the factors that influence energy poverty. In one of these research projects, CID Centre Co-Director, Sefa Awaworyi Churchill, and his PhD student, Musharavati Ephraim Munyanyi, produced the first study that examined the impact of foreign aid on energy poverty. The effectiveness of foreign aid in promoting development has been the subject of a long history of research that has produced conflicting results. On one hand, the effects of aid tend to be negative when aid creates a dependency syndrome, which is characterised by corruption, misallocation of resources and distortion of systems in aid-receiving countries. On the other hand, aid can promote development when properly managed.

Using household-level data from Senegal, an African country with very high energy poverty rates, the researchers show that foreign aid is able to help reduce the probability of energy poverty. The researchers focus on aid projects across several districts in Senegal and found that household proximity to aid projects reduces the probability of energy poverty. The researchers also found that the effect of aid on energy poverty is channeled through various factors. In particular, foreign aid in Senegal is associated with higher economic growth, lower-income poverty, and better educational outcomes, all of which contribute towards a lower probability of being in energy poverty.

Recommendations to policymakers and researchers

As part of the 2030 Agenda for Sustainable Development, the global development community has advanced increased investment in “smarter” foreign aid as an important approach to achieve the sustainable development goals (SDGs). The research findings lend support to the effectiveness of foreign aid in achieving SDG 7, which focuses on ensuring universal access to reliable, sustainable, affordable and modern energy services by 2030. More targeted aid is, therefore, likely to contribute significantly to the achievement of some development goals. Proper donor coordination accompanied by effective local governance can go a long way to promote development.

The research community can also play a more active role in contributing to energy poverty policy through research. The lack of good quality research is one of the main issues hindering the ability of policymakers to deal with energy poverty. CID Centre Co-Director, Sefa Awaworyi Churchill, in his capacity as managing guest editor for Energy Economics, is therefore, working with colleagues within the international development community to promote research on energy poverty in the form of a special issue on energy poverty. The research community is encouraged to make submissions and contribute to policy via good quality research on measures, antecedents and implications of energy poverty. Details can be found here.

Sefa Awaworyi Churchill and Musharavati Ephraim Munyanyi are academics in the College of Business and Laws Centre for International Development.