Policy Documents

Research & Commentary: Energy Poverty

July 24, 2014

Some 1.3 billion people around the world do not have access to electricity, and 2.7 billion people, mostly concentrated in sub-Saharan Africa and Southeast Asia, lack clean cooking facilities, according to the most recent International Energy Agency report. As the late economist Julian Simon and others have noted, energy is the “master resource” because ultimately, it is embedded in everything humans do or create. This is the fundamental reason why lack of access to energy is a major problem.

Energy poverty is a pervasive global issue, and it remains a problem in the United States to an extent. According to the American Enterprise Institute, senior citizens spend up to 20 percent of their Social Security income on energy and families receiving welfare spend up to 26 percent of their annual income on energy. AEI defined energy poverty as spending more than 10 percent of a household’s income on energy. This problem is exacerbated when expensive sources of energy such as wind and solar are force-fed into the grid through policies like renewable portfolio standards, net metering, and the production tax credit.

The harmful ramifications of energy poverty are especially unfortunate considering the United States is the leading global producer of oil and natural gas in terms of energy content with the largest coal reserves, a consequence of the breakthrough combination of hydraulic fracturing and directional drilling.

Policies mandating the use of expensive energy sources are implemented to reduce carbon dioxide (CO2) emissions. CO2 emission levels are primarily dependent on developing countries, however, so policies supporting renewable energy technologies such as wind and solar in the West cannot make a meaningful impact on global CO2 emissions, especially in a cost-effective manner. Conversely, providing everyone on the planet with access to reliable electricity would increase CO2 emissions by only 0.9 percent — a near-insignificant amount, according to International Energy Agency Chief Economist Fatih Birol.

Influential author and political scientist Bjorn Lomborg, who says climate change is a serious problem, nonetheless argues the people of sub-Saharan Africa and Southeast Asia should follow the lead of China, who have been systematically eradicating poverty by heavily utilizing inexpensive forms of energy. One analysis found “for every additional 4.5 million tons of coal used in China, or for every additional 450,000 barrels of oil consumed, 1 million people were lifted out of poverty.”

A May 2014 paper published by the left-leaning Brookings Institution found renewable energy incentives in the United States were overly biased in favor of wind and solar, which are more expensive than other low-CO2 alternatives such as natural gas combined cycle, hydroelectric, and nuclear power. Policymakers could alleviate energy poverty by repealing such biased incentives or at the very least allowing wind and solar compete on a more level-playing field with other low-CO2 technologies, while also supporting the developing world’s use of affordable energy by lifting unnecessary regulations and restrictions on traditional energy sources.

The following documents provide additional information about energy poverty and energy policy in general.

 

Ten Principles of Energy Policy
http://heartland.org/policy-documents/ten-principles-energy-policy
Heartland Institute President Joseph Bast outlines the ten most important principles for policymakers confronting energy issues, providing guidance to help deal with ongoing changes in markets, technology, and policies adopted in other states, supported by a thorough bibliography. 

Energy for All: Financing Access for the Poor
http://heartland.org/policy-documents/energy-all-financing-access-poor
The International Energy Agency estimates access to electricity for all the poor in developing countries would increase global carbon dioxide emissions by less than 1 percent while saving 1.5 million lives every year. 

Energy Poverty: How 'Going Green' Pushes Consumers Into the Red
http://www.youtube.com/watch?v=-hcIegpDvFU
This video produced by the American Enterprise Institute examines energy poverty in the United States and abroad and finds “green energy agendas” are an easy-to-prevent contributor to the problem. Former AEI Scholar Ken Green provides a useful introductory explanation on how energy affects everything people do and use. 

Two Videos That Illuminate Energy Poverty
http://www.gatesnotes.com/Energy/Two-Videos-Illuminate-Energy-Poverty-Bjorn-Lomborg
Philanthropist and Microsoft cofounder Bill Gates features two videos on his blog with Danish political scientist Bjorn Lomborg, who says even though he believes global warming is a serious problem, global energy poverty is more urgent and deserves far more attention. Lomborg suggests aiding struggling regions such as Sub-Saharan Africa and Southeast Asia, employing the same wealth-creating strategy that worked for China, which has relied on heavy use of fossil fuels to affordably power safer standards of living and lift 680,000,000 people out of poverty in the last 30 years. 

Energy Fact of the Week: Energy and Poverty in China
http://www.aei-ideas.org/2011/07/energy-fact-of-the-week-energy-and-poverty-in-china/
Steven F. Hayward of the American Enterprise Institute examines World Bank figures and finds China’s energy consumption increased 406 percent from 1981 to 2009, a period in which the number of people living in absolute poverty (less than $1 a day) shrank from 652 million to about 80 million or fewer. Given China’s heavy consumption of fossil fuels, Hayward calculates, “for every additional 4.5 million tons of coal used in China, or for every additional 450,000 barrels of oil consumed, 1 million people were lifted out of poverty.” 

One-Quarter of World's Population Lacks Electricity
http://www.scientificamerican.com/article/electricity-gap-developing-countries-energy-wood-charcoal/
This 2009 Scientific American article covers a report from the United Nations Development Programme that found the number of people without electric power is about 1.5 billion, approximately a quarter of the world’s population, concentrated mostly in Africa and southern Asia. Although Scientific American writes some people are hesitant to help provide electricity to these regions because of the expansion of fossil fuel consumption that would ensue, International Energy Agency Chief Economist Fatih Birol is quoted as saying universal electricity would only increase global CO2 emissions by 0.9 percent. 

The Great Climate Change Fraud
http://seekingalpha.com/instablog/227454-john-petersen/2165332-the-great-climate-change-fraud
John Petersen, executive vice president and chief financial officer of ePower Engine Systems, demolishes the notion big oil and the industrial West’s CO2 emissions are to blame for predicted dangerous climate change. Instead, Petersen — who takes no position in the climate change debate — posits the simpler reality is the population of the planet quadrupled over the last century, and most of that growth came from developing countries desperately seeking to catch up to the developed world’s standard of living.

Why the Best Path to a Low-Carbon Future is Not Wind or Solar Power
http://www.brookings.edu/blogs/planetpolicy/posts/2014/05/20-low-carbon-wind-solar-power-frank
Charles Frank, a nonresident senior fellow at the Brookings Institution, reports on his research on low-CO2 energy alternatives. Frank finds natural gas combined cycle is the cheapest low-CO2 energy alternative, even cheaper per kWh than power from coal or gas simple cycle plants. The most expensive alternatives are solar and wind. Frank says gas combined cycle, nuclear, and hydroelectric are the most cost-effective options for transitioning to a low-CO2 future. 

India Invokes 'Right to Grow' to Tell Rich Nations of its Stand on Future Climate Change Negotiations
http://timesofindia.indiatimes.com/home/environment/global-warming/India-invokes-right-to-grow-to-tell-rich-nations-of-its-stand-on-future-climate-change-negotiations/articleshow/36724848.cms
Indian Environment Minister Prakash Javadekar told the audience at a World Day to Combat Desertification event that energy poverty is an “environmental disaster” and “unless we tackle poverty, unless we eradicate poverty, we cannot really address the climate change.” He also stated, “To that end, we need to grow. Our net emission may increase.”

 

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other topics, visit the Environment & Climate News Web site at http://news.heartland.org/energy-and-environment, The Heartland Institute’s Web site at http://www.heartland.org, and PolicyBot, Heartland’s free online research database, at www.policybot.org.

Whether sending an expert to your state to testify or brief your caucus, hosting an event in your state, or simply sending you further information on the topic, Heartland can assist you. If you have any questions or comments, contact Heartland Institute State Government Relations Manager Logan Pike at lpike@heartland.org or 312/377-4000.