A Vision to End Energy Poverty

By Hugh Whalan – Guest Blogger

What is energy poverty?

Energy forms the foundation of almost every economic development outcome – powering education in classrooms, refrigerating vaccines, pumping clean water, allowing for study or work after dark. Everything relies on energy. Think about what you do in the morning, and how many times you flick a switch, or press a button and expect something to work. We do this dozens of times a day, without thinking about it.

For more than 2.4 billion people, that kind of access to energy is nothing but a dream. These people spend hours each day collecting firewood, and the fuels they do have access to - like dung, charcoal and kerosene – are either polluting or expensive, or both. This is energy poverty. The energy poor spend more on energy, and get less for it.

Graphic source: World Health Organization

Indoor air pollution caused by these fuels kills more people each year than malaria; the trees cut down for firewood lead to deforestation; and the greenhouse gases released by burning these fuels contribute to climate change.

Why is energy poverty the most important development need of today?

Energy poverty is only starting to receive the kind of attention it warrants. The International Energy Agency recently stated that the UN goal of halving world poverty by 2015 would only be met if energy was expanded to a further 700 million people.

Graphic source: PracticalAction.org

I think the challenge, and the opportunity for energy is bigger than that. We live in a world projected to hit 9 billion people- with most of this population being born into poverty. Along with this population comes greenhouse gas emissions - 95% of the increases in greenhouse gas emissions over the next three decades are projected to come from the developing world. These greenhouse gases will drive climate change, which is expected to disproportionately affect the poor and hinder efforts to alleviate poverty. Through this lens, climate change is intimately connected to poverty.

It’s a vicious cycle, where energy poverty creates a reliance on polluting fuels which not only penalize the poor, but also contribute to climate change which further entrenches poverty.

Aerial imagery of the Haiti-Dominican Republic border shows the clear toll of deforestation fueled by energy poverty. (Image source)

By addressing energy poverty effectively, there is a good chance we can alleviate poverty, reduce greenhouse gas emissions, and improve access to education, health services, clean water, and other development outcomes.

How do we address energy poverty effectively?

I believe the answer lies in green energy and the free market.

The fact that there are 2.4 billion people without access to modern energy – living with virtually the same energy resources as our cavemen ancestors 125,000 years ago - is something I see as one of the largest market failures in the world today. It is a market failure because these people are paying customers receiving substandard quality and service.

A vision for addressing energy poverty.

Enter the 21st century green energy entrepreneur. This green energy entrepreneur sells energy products such as LED lamps, solar home systems, clean burning cook stoves, solar powered drip irrigation systems and biogas digesters. These systems cost more upfront than traditional energy resources like kerosene and charcoal, but a fraction of the cost over a longer period of time. All of these systems pay for themselves through energy savings and increased revenue generation in a matter of months, not years.

To make these systems affordable to everyone, the green energy entrepreneur works with microfinance institutions which act as bankers to the poor. Similar to the way that we in the West often would not be able to afford a car without a car loan, or a house without a mortgage, these microfinance institutions provide loans for these green energy systems.

All of a sudden, even the poorest, those earning $1 -6 a day, are able to purchase green energy in a way that accommodates their subsistence income patterns. Within 10 years, market failure is well on its way to being corrected, and green energy entrepreneurs are creatively setting about reaching those parts of the population not yet reached. More than a billion people have received access to some form of modern energy and green energy businesses form one of the largest industries in the developing world, only smaller in size than agriculture. It becomes standard to see green energy in even the most remote and poor households.

A result of this shift to green energy is that developing economies spend far less on fossil fuel based resources, and widespread access to energy means children can study after dark, businesses have longer opening hours, indoor air pollution is no longer a major killer, women waste far less time collecting firewood, and clean water is commonplace. A response to poverty becomes one of the most effective forms of greenhouse gas mitigation in history.

One step at a time.

Energy in Common (EIC) is a social enterprise I launched with co-founder Scott Tudman with the aim of allowing individuals to participate in correcting this market failure. We allow individuals to provide tiny green loans to the poor. As a result of our lenders, dressmakers, bakers, restaurant owners, and masons have safe, affordable, reliable access to modern energy – helping them to alleviate poverty and reduce greenhouse gas emissions. You can get started with a loan as little as $25.

Once a loan has been repaid to you, our team of people at EIC analyze the carbon data over the period of your loan and add up the amount of emission reductions created. These emission reductions are then sold to lenders (like you) as carbon offsets, which means you can buy the very carbon offsets that you helped to create. This allows you to reduce your carbon footprint too. That tax-deductible purchase then goes straight back into finding and helping even more entrepreneurs – and so the cycle begins again.

We aim to expand green energy access to over 15 million people within 5 years. In the process, we intend to bring resources and attention to the problem of energy poverty. You can find our website at www.energyincommon.org and you can lend at www.energyincommon.org/lend

Guinean students study under the lights of the Conakry airport parking lot in June. (Image source: Rebecca Blackwell/The Associated Press, via DotEarth)

See also: More posts on 'energy poverty' from www.WattHead.org