ARTICLE IN PRESS

Energy Policy 33 (2005) 1367–1372

Viewpoint
Alleviating energy poverty for the world’s poor
Ambuj D. Sagar*
Science, Technology, and Public Policy Program, Belfer Center for Science and International Affairs, John F. Kennedy School of Government,
Harvard University, 79, John F. Kennedy St., Cambridge, MA 02138, USA

Abstract

Improving energy services for poor households in developing countries remains one of the most pressing challenges facing the
development community. The dependence of these households on traditional forms of energy leads to significant health impacts as
well as other major disbenefits, yet there has been little progress in meeting this challenge. This viewpoint argues for an ‘energy-
poverty alleviation’ fund to help provide modern energy services to these households. It also proposes an approach through which to
create such a fund, namely by introducing an incremental levy on petroleum. Notably, this scheme does not need a global agreement
since a levy could be introduced by major oil-exporting countries. The implementation of this mechanism would result in a climate-
friendly outcome (even before taking into account the elimination of products of incomplete combustion resulting from the
traditional household use of biomass-based fuels) while providing immense socio-economic benefits to the world’s poor. Such an
approach would allow significant progress on the sustainable development front while reducing global greenhouse gas emissions,
and therefore is very much consistent with the United Nations Framework Convention on Climate Change.
r 2004 Elsevier Ltd. All rights reserved.

Keywords: Biomass; Climate change; Sustainable development; Equity

1. Introduction example, in rural sub-Saharan Africa, many women

An estimated 2 billion people worldwide, mostly in
rural areas, continue to suffer from energy poverty
(World Bank, 1996, Goldemberg et al., 2000). This
remains one of the major challenges facing the develop-
ment community. Although much attention has been
focused towards this problem, only limited progress has
been made in tackling it.
The per-capita energy consumption of these indivi-
duals, comprising the poorest third of humanity, is a
minuscule fraction of that of citizens of industrialized
countries and much smaller than even that of urban
dwellers in developing countries. They do not have
access to safe, clean fuels and subsist mainly on
traditional energy sources such as animal dung, crop
residues, and wood (Reddy et al., 1997; Goldemberg
et al., 2000). The continuing reliance of poor households
on such forms of energy comes with major disbenefits
including:
* substantial, and often increasing, time and effort to
procure firewood or other forms of biomass—for
have to carry 20 kg of fuel wood an average of 5 km
every day (IEA, 2002);
* possibly high price per unit of energy services (since
subsidies often increase as one goes up the energy
ladder (Reddy et al., 1997)); and
* severe and widespread health impacts associated with
indoor air pollution resulting from the inefficient
combustion of energy sources in poor households,
with women and children facing particular risk
(Smith, 1993). Recent estimates by the World
Health Organization suggest that about 1.6 million
premature deaths can be annually attributed to
indoor air pollution from biomass and coal use in
poor households in developing countries (WHO,
2002, cited in Smith, 2003), which makes it the sixth
largest health risk factor in developing countries.
Indoor smoke from these solid fuels is, in fact,
responsible for about 38 million disability-adjusted
lost years (DALYs)1 in developing countries with
their attendant social and economic costs (WHO,
2002).

*Corresponding author. Tel.: +1-617-496-6218; fax: +1-617-496-

1
0606. One DALY represents one healthy year of life lost by an individual
E-mail address: ambuj sagar@harvard.edu (A.D. Sagar). due to disease/adverse health condition.

0301-4215/$ - see front matter r 2004 Elsevier Ltd. All rights reserved.
doi:10.1016/j.enpol.2004.01.001
 ARTICLE IN PRESS
1368 A.D. Sagar / Energy Policy 33 (2005) 1367–1372
For these reasons, the continued dependence on
traditional fuels for household energy use presents a
particularly troubling aspect of the energy poverty
problematique. Why, then, has little progress been made
on this front?
Government agencies, non-governmental organiza-
tions (NGOs), development organizations and other
actors have been involved in a variety of programs to
enhance—quantitatively and qualitatively—energy ser-
vices for the poor. But the funds channeled toward rural
energy constitute only a small fraction of the total funds
targeted for the expansion and transformation of the
energy sector in developing countries; it is the commer-
cial energy segment that has received much of the
attention as well as investments by developing country
governments, private actors, and bilateral/multilateral
development agencies. Furthermore, reducing the pro-
blems associated with the use of traditional fuels in poor
households remains only one of a range of objectives of
rural energy programs.2 As a result, even though efforts
such as those promoting cleaner energy-conversion
devices (e.g., improved cookstoves) as well as less-
polluting fuels such as biogas have shown some success
(see, for example, Smith et al., 1993), the resources and
attention devoted to improving household energy use
are not at all commensurate with the magnitude of the
problem.
There also remain numerous barriers to developing
and disseminating new rural energy technologies as well
as ensuring their effective use over the long-term. While
this is particularly germane for technologies such as
solar PV, which are hindered by their high costs as well
as technological complexity, it is also relevant for other
devices such as improved cookstoves, biomass gasifiers,
and biogas digesters.
As a result, the dominant approaches for providing
improved energy services to poor households—promot-
ing the cleaner use of biomass or other renewables—
have brought only limited progress. Furthermore, the
time needed for the development and widespread
deployment of advanced renewable technologies, as well
as their economics, also hinders them in making a
significant contribution on this front in the near future.
All of this has contributed to a distinct lack of
progress on provision of modern energy services for
household use in rural areas.
2. The missing link to the Climate Convention
The climate issue has also provided some impetus to
many rural renewable energy programs since these
2
Other objectives include providing electric power for rural
industries, for improved healthcare facilities, as well as for public
goods such as lighting.
provide savings in greenhouse gas (GHG) emissions
compared to conventional options for enhancing rural
energy supply such as electricity grid extension or diesel
gensets. But climate-driven programs have mostly
bypassed household energy use for cooking and heating
since this generally utilizes biomass-based energy
sources that have been traditionally regarded as carbon
neutral. This reliance by the poor on the so-called
‘climate-friendly’ biomass energy sources combined with
their low levels of energy use has resulted in a lack of
motivation for policy-makers and NGOs to focus on
this group in the climate context.
Recent research has somewhat upended the conven-
tional wisdom regarding the climate neutrality of
biomass combustion in households. It has been shown
that inefficient combustion of traditional biomass fuels
in cookstoves yields significant gaseous products of
incomplete combustion (PICs) that are GHGs (Smith
et al., 2000). For example, it is estimated that, for every
megajoule (MJ) of heat delivered, even the use of
renewably harvested wood in the currently prevalent
mix of household stoves in India leads to two-thirds the
carbon-equivalent emissions of the ‘basic’ GHGs (i.e.,
CO2, CH4, and N2O) in comparison to kerosene stoves
(Smith et al., 2000). For non-renewable wood, dung, or
crop residues, emissions of these GHGs (for the fuel/
stove combinations prevalent in India) are well in excess
of those from kerosene stoves on a per-unit-heat-
delivered basis.3 It should also be noted that when
other PICs such as non-methane hydrocarbons and
carbon monoxide are also included in the calculations,
these numbers rise even further (Smith et al., 2000).
Additionally, the emission of dark particles from
biomass combustion also contribute to what UNEP
has termed the ‘‘Brown Cloud’’ (UNEP and C4, 2002)—
this has received attention recently because of its
potential implications for regional climate patterns,
reduced agricultural productivity, and respiratory ail-
ments over long distances.
One would expect these links between rural energy use
and the climate issue to provide some impetus towards
widespread deployment of devices such as improved
cookstoves or fuels such as biogas whose use would
reduce emissions of GHGs as well as dark particles
which in turn would result in climate benefits while also
yielding immense ancillary social and health benefits.
Yet this has not happened, at least not on a scale that is
3
For the case of India, it is estimated that the global warming
commitment (GWC) of the basic set of GHGs emitted by the use of
various fuels for delivering 1 MJ of energy service is as follows (in
equivalent grams carbon as CO2): kerosene: 39; renewable wood: 26;
non-renewable wood: 165; crop residues: 66; and dung: 158 (Smith
et al., 2000). Note that the emissions for any fuel source vary with the
stove in which it is burnt, and therefore these estimates of average
emission from these fuel source are based on estimates of the
distribution of their use in various stoves in the Indian context.
 ARTICLE IN PRESS
A.D. Sagar / Energy Policy 33 (2005) 1367–1372
required to make a significant dent in this problem.
Furthermore, it is unlikely that GHG-mitigation-project
developers will devote much attention to projects of this
nature, given that transaction costs as well as monitor-
ing and verification requirements for such small-scale
individual emitters may impose a high burden.
Hence, this large group of rural and urban poor—
comprising one-third of humanity—has been, and is
likely to remain, virtually excluded from the climate
discussions, in large part because its members are
responsible individually only for very low levels of
GHG emissions (although the aggregate emissions from
this large group are not insignificant). This is an
unfortunate situation, and somewhat ironical. The
benefits of international cooperation are likely to flow
to major current or future GHG emitters to help them
reduce their emissions, while low-emitting individuals or
households, who by virtue of their (admittedly involun-
tary) energy-use patterns already contribute to the
achievement of the primary objective of the United
Nations Framework Convention on Climate Change
(UNFCCC), continue to be ignored (Sagar and Banuri,
1999). This amounts to something akin to a ‘‘polluters
get paid’’ principle (Sagar, 1999). While those emitting
large quantities of GHGs in the South do need financial
and technical assistance to curtail the growth of their
emissions, this should not result in the exclusion of low-
emitters from the UNFCCC discussions, especially since
the climate issue is a major driver, and increasingly so, in
the transformation of the global energy sector.
In fact, the principle of equity stated in the UNFCCC
as well as the sustainable development imperative
highlighted in both the Climate Convention and the
Kyoto Protocol clearly suggest that greater attention
must to be paid to this group of individuals who already
contribute only low GHG emissions.
3. An ‘energy-poverty alleviation’ fund
Given all this, the question is how to help in the
sustainable development of these individuals in a
manner that is consistent with the aims and principles
of the UNFCCC. The dominant approach of promoting
the cleaner use of biomass or other advanced renewable
technologies has brought only limited progress for the
reasons mentioned earlier.
It has been pointed out that the household energy
needs of this group correspond to a small fraction of the
global energy consumption (Goldemberg et al., 2000).4
Recently, Smith (2003) has also suggested the substitu-
4
Goldemberg et al. (2000) suggest that the annual cooking needs of
the 2 billion people not served by modern fuels correspond to about
1% of global commercial energy consumption or 3% of global oil
consumption.
1369
tion of traditional fuels by fossil fuels for these
individuals—while eminently logical, given the large
ancillary benefits and the marginal increase in GHG
emissions, such an approach would require substantial
funds and also may find some opposition from climate/
environmental groups who are ideologically averse to
substituting renewables by fossil fuels.
I highlight here the conceptual outline of a specific
mechanism through which to promote an energy
transition in poor households that would enhance their
human development while remaining consistent with the
aims and principles of the Climate Convention.
3.1. An ‘energy-poverty alleviation’ levy on petroleum
The basic concept underlining this mechanism is
rather straightforward. It involves levying an incremen-
tal price increase on petroleum that could be termed an
‘energy-poverty alleviation’ levy, and then using the
funds collected to provide cleaner-burning fuels such as
kerosene or LPG for meeting the household energy
needs of this poorest part of humanity. Helping move
these individuals up the energy ladder would be a major
step towards enhancing their welfare. Additionally,
some part of the funds collected could also be used to
develop improved technologies for kerosene or LPG use
among the rural/urban poor.5
How large would such a levy have to be to make a
useful contribution? We assume that the annual basic
energy needs of these 2 billion people would be covered
by about 2.1 exajoules (EJ) of delivered energy.6 Since
energy delivery devices for kerosene and LPG have an
energy efficiency of about 50% (Baldwin, 1987, cited in
Goldemberg et al., 2000), this translates to about 100
million tons oil equivalent (mtoe) of supplied energy.
Since the current annual global consumption of crude
oil is about 3500 million tons (MT) (IEA, 2003), we
would need to levy a price increase of about 3.7% to
raise sufficient funds to purchase about 100 mtoe of
kerosene or LPG (assuming that the prices of these
refined products are about 30% higher than the crude
oil precursor (see, for example, Maples, 2000)).
While a global approach to such a levy would be most
desirable, it would require agreement by a large number
of nations (including those that are both major
producers as well as consumers such as the United
5
Just as the funding for improved cookstove programs is not very
large (Barnes et al., 1993), there is also little directed effort to develop
improved kerosene or LPG stoves that could be used in poor
households.
6
This is based on the estimate by the World Energy Council (1999)
that the annual basic energy needs of the poor can be met by about
1.04 GJ of useful energy per capita. This estimate relies on an
assessment by the Indian Advisory Board on Energy, and is slightly
lower than that indicated in Goldemberg et al. (2000).
 ARTICLE IN PRESS
1370 A.D. Sagar / Energy Policy 33 (2005) 1367–1372
States). This would significantly constrain the possibility
of such a mechanism being implemented.
An alternate, and possibly more workable, approach
could be for OPEC members (or some larger group of
oil-exporting nations) to agree among themselves to
impose such a levy on the sales of their oil. OPEC
members account for 40% of the world’s oil production
and are responsible for almost 55% of global oil exports
(EIA, 2003a); furthermore, OPEC members have much
of the world’s swing oil production and therefore
determine, to a large extent, global oil prices. Other
major oil exporters include Russia, Mexico, and Nor-
way. Exports of oil (crude as well as refined products) by
these countries, along with OPEC members, add up to
almost 50% of the global oil consumption (EIA, 2003a).
Thus a levy imposed on the exports of oil by OPEC or
this larger group of 14 countries (OPEC members plus
Russia, Mexico, and Norway) should be able to raise
significant funds that could underwrite, at least in part,
an energy transition for the world’s poor. For example,
a levy of 8% on crude exports (and an equivalent
amount on refined product exports) by this ‘‘Group of
14’’ would raise sufficient funds to provide LPG or
kerosene to cover fully the basic energy needs of these
households.
3.2. Positive global climate implications and large socio-
economic benefits for the poor
What are the carbon emission implications of
such a scheme? While it would seem that a shift from
biomass-based energy sources to fossil fuels such as
kerosene and LPG would lead to an increase in GHG
emissions, two issues need to be considered. First, there
will be some reduction of oil consumption among
current consumers due to the imposition of the levy
(as illustrated by the elasticity-of-demand calculations
below), which will lead to a reduction in carbon
emissions. In addition, the elimination of the PICs
resulting from inefficient combustion of biomass will
help further offset the increase in carbon emissions that
result from the switch from biomass to kerosene or
LPG.
As an illustrative calculation, let us assume a levy of
8% imposed by this ‘‘Group of 14’’ on their crude
exports (and an equivalent amount on refined product
exports). If we assume a long-term price elasticity of
demand to be about –0.5 (i.e., a 10% increase in prices
reduces demand by 5%),7 then this levy will result in a
reduction in global oil consumption by 4%, i.e., down to
7
There is a wide variation in the estimates of the price elasticity of
demand for oil. We use an aggregate price elasticity of –0.5, generally
consistent with Gately and Huntington (2002) who estimate a price
elasticity of –0.64 for OECD countries and –0.18 for non-OECD
countries. The former group account for about 62% of the global oil
consumption and the latter group for about 38% (EIA, 2003a).
about 3360 MT.8 Taking into account the 100 mtoe of
LPG or kerosene that would be made available for rural
energy households, the total global consumption would
still be equivalent to about 3460 MT of oil.9 Oil accounts
for about 42% of the carbon emissions globally from
fossil-fuel use (EIA, 2003b) and carbon emissions from
energy-use account for about two-thirds of the global
GHG emissions in carbon-equivalent terms (IPCC,
2000). Hence, the implementation of such a levy would
result in a decrease in global GHG emissions by about
0.3% due to the overall reduction in oil consumption.10
Accounting for the elimination of PICs from the use of
traditional fuels would result in additional reduction in
GHG emissions.11 It should also be noted that even with
a move to fossil fuels, it is highly unlikely that members
of this part of humanity will become large emitters of
GHGs, given their economic situation and low energy
consumption levels.
Thus the climate implications of moving these 2
billion people up the energy ladder though the kind of
scheme suggested above are quite favorable. Addition-
ally, the health and social benefits of implementing such
a mechanism would be enormous. It would mitigate the
health burden of indoor air pollution caused by the
combustion of traditional biomass sources. It would
reduce the time and drudgery required for gathering
firewood and other biomass resources—some of the
saved time could be used for other economically
productive applications in the case of adults, and for
education in the case of children. Decreasing the reliance
8
Such a mechanism could also be used to raise funds by imposing a
levy on the sale of other fossil fuels such as natural gas.
9
This ignores the slightly higher energy density (on a mass basis) of
kerosene and LPG as compared to oil (see IEA, 2003).
10
This first-order calculation ignores secondary increases in emis-
sions resulting from some inter-fuel substitution to natural gas and
coal that might take place because of the price increase in oil. It also
ignores the lower carbon coefficients for kerosene and LPG as
compared to oil (see EIA, 2002).
11
Smith et al. (2000) indicate that in India, wood accounts for about
63% of the biomass burnt in cookstoves, crop residues for about 20%,
and dung for the remaining 17%. Although the total energy efficiency
(TEE) of various biomass/stove combinations varies significantly, for a
first-order calculation, we assume that the aggregate TEE of wood/
stove combinations as used in India is about 0.2, of crop residue/stove
combinations as used, about 0.11, and of dung/stove combinations as
used, about 0.09 (based on the data in Smith et al., 2000). We also
assume that the calorific values of wood and crop residues are roughly
similar, and dung about 20% lower (based on the data in Smith et al.,
2000). This would indicate that wood supplies about 79% of the energy
delivered, crop residues about 14%, and dung about 7% in Indian
poor households. Even if we conservatively assume that all this wood is
harvested renewably, the global warming commitment of the ‘basic’
GHGs emitted by the mix of traditional fuels in the Indian context
would be about the same as the GHGs emitted by kerosene use for an
equivalent amount of energy delivered.
Note that if other PICs such as non-methane hydrocarbons are also
included in the calculation, then the shift to kerosene is even more
favorable. Note also that LPG is more attractive than kerosene since it
burns more cleanly.
 ARTICLE IN PRESS
A.D. Sagar / Energy Policy 33 (2005) 1367–1372
on biomass for meeting the energy needs would lessen
the pressure on the environment. And it would also
make these groups less vulnerable to climate change by
reducing their dependence on natural resources.
3.3. Feasibility and implementation issues
It should be noted here that OPEC has been greatly
concerned with the imposition of carbon taxes on fossil
fuels (as have other major oil exporters) because this
would depress the demand for petroleum in the long
term, and also because the taxes would be imposed and
collected by individual countries and hence this would
cost these exporters revenue.12 But by applying this levy
themselves, and then using the funds generated to
provide kerosene or LPG for poor households, OPEC
members or other oil-exporting countries will not lose
any revenue. On the contrary, they gain some additional
revenue compared to the base case and moreover add a
large fraction of humanity as new customers for their
products at a time when the long-term value of their
resources may be in jeopardy as climate constraints start
becoming more pressing.
Furthermore, such an approach may also have
significant public relations value for OPEC members:
instead of being singled out for opposing progress on
environmental issues, they can instead claim credit for
making an immense contribution to sustainable devel-
opment. It would also make allies of other developing
nations, and hence strengthen the ‘‘Group of 77’’ (G-77)
coalition. It should also gain OPEC countries the
support of environment, development, and human
rights NGOs as well as multilateral development
agencies.
There is another major advantage of this approach.
Since the deal does not need to be struck globally, it
reduces the number of extraneous actors who can shape
the final outcome or even play the role of ‘spoiler.’ If, for
example, OPEC members follow such an approach in
cooperation with other G-77 countries, they together
can work to design an effective mechanism rather than
having a global discussion that would much more likely
be shaped by major industrialized countries and/or
multilateral development agencies. An alternate fund for
the specific developmental purpose of energy-poverty
alleviation that puts developing countries in charge will
be a welcome change and enhance the participation in
agenda-setting and implementation by their govern-
ments as well as NGOs and other groups. Of course,
there will probably need to be oversight mechanisms to
ensure that the funds get used for the purpose for which
they are collected, i.e., helping provide cleaner and
12
Already, national taxes on petroleum generate higher revenues for
the governments of consuming countries, as compared to the full
export income of oil producers (OPEC, 2001).
1371
improved energy services for the poor. Such a scheme
also avoids bilateral deals of the kind that are the most
likely under the emerging climate regime in which
developing countries generally are at a disadvantage in
negotiating the best deals.13
While this approach mainly targets consumers in
wealthy countries (since they consume the bulk of the
world’s oil), it also targets petroleum users in developing
countries who are often high GHG emitters (relative to
their poor compatriots). This is a major departure from
current discussions in the climate regime that makes a
strict separation between poor and rich countries. In this
scheme, the levy would impact consumers globally, but
in proportion to their use of petroleum products. Hence,
industrialized country consumers would still bear a
greater burden on average than their developing country
counterparts. They, of course, will likely not be
particularly supportive of such a mechanism but the
proposal is constructed so as to obviate the need for
their cooperation. Furthermore, the price increases
under this proposal would be extremely modest, i.e., of
the order of a few percent.14 While a levy of 8% would
be needed to fully cover the basic energy needs of the
world’s poor, even a smaller levy would still make a
significant contribution. It should also be highlighted
that this price increase would not be to enrich the OPEC
but to help the world’s poor.15
Some issues will clearly need further consideration,
such as:
* What would be the best mechanism for distributing
kerosene/LPG to rural/urban poor? There is also a
need for special attention to ensure that these funds
result in additional benefits for the poor (rather than
replacing existing programs that allow national
governments to utilize freed-up finances for other
goals).
* What would be the best institutional arrangement
for imposing this levy as well as for distributing fuels
to poor? This will require an examination of the
possible roles of both supra- and sub-national
institutions.
* What would be the general-equilibrium implications
for the poor of such a levy on petroleum products,
and how could these be minimized?
13
There will likely be more ‘sellers’ than ‘buyers’ for GHG
mitigation projects. Additionally, developing country actors’ (in the
public or private sector) often suffer from relative lack of information
as well as analysis and negotiating skills.
14
A price increase by a small percent is quite modest in comparison
to the fluctuations that already take place in oil prices. For example,
spot crude prices increased by over 50% between 1999 and 2000 (BP,
2003). Also, for reference, oil prices increased by over three times
between 1973 and 1974 during the ‘‘oil crisis’’.
15
To avoid any criticism on this front, OPEC members as well as
other participating oil exporters could even offer the LPG or kerosene
(or oil for that purpose) at somewhat concessionary rates.
 ARTICLE IN PRESS
1372 A.D. Sagar / Energy Policy 33 (2005) 1367–1372
4. Conclusion
While such a mechanism can proceed outside the
UNFCCC, there are a number of reasons why the
Climate Convention should be supportive of it. First of
all, this should be seen not as a mechanism that switches
over biomass users to fossil fuels and hence undercuts
the Convention but one that contributes in a major way
to the sustainable development of a significant fraction
of humanity that is already contributing to the objective
of the Climate Convention by virtue of its low per-capita
GHG emissions. The mechanism moves the members of
this group up the energy ladder, and that may result in
some increase of their GHG emissions through the
switch to fossil fuels, but this is consistent with the
recognition in the UNFCCC of the fact that emissions
need to grow to meet developmental needs. Further-
more, in this case, since the mechanism transfers
emissions from current oil consumers (and hence
GHG emitters) to the 2 billion low-emitters (while also
eliminating PICs resulting from the traditional use of
biomass), the global result is climate friendly. Such a
transfer is also consistent with the equity principle
enshrined in the UNFCCC.
In order to be successful, the Climate Convention
needs to protect the climate system while promoting
sustainable development. This mechanism allows sub-
stantial movement towards sustainable development
while reducing global GHG emissions. What can be a
better yardstick for progress?
Acknowledgements
The research for this paper was undertaken as part of
the Energy Technology Innovation Project at the Belfer
Center for Science and International Affairs, Kennedy
School of Government, Harvard University, with
support from the Energy Foundation, the Heinz Family
Foundation, the William and Flora Hewlett Founda-
tion, the David and Lucile Packard Foundation, and the
Winslow Foundation. The author would also like to
thank Chella Rajan and Milind Kandlikar for their
helpful comments on earlier drafts of this paper.
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