Energy poverty is a term which is often used but mostly lacks a clear definition. Several existing approaches define energy poverty line as the minimum quantity of physical energy needed to perform such basic tasks as cooking and lighting. The World Bank Development Research Group proposes an alternative measure that is based on energy demand. It defines the energy poverty line as the threshold point at which energy consumption begins to rise with increases in household income in a recent study on "Energy Poverty in Rural and Urban India: Are the Energy Poor Also Income Poor?" by Shahidur R. Khandker, Douglas F. Barnes and Hussain A. Samad of The World Bank Development Research Group's Agriculture and Rural Development Team.
This approach was applied to cross-sectional data from a comprehensive 2005 household survey representative of both urban and rural India.
The study notes that the patterns of urban and rural energy demand in India differ markedly. In rural areas, patterns of energy use typically involve high reliance on traditional fuels, including wood, dung, and straw burned in inefficient stoves. In urban areas, only one-third of households use fuelwood, compared to nine-tenths of rural households. In terms of quantity of energy use, rural households consume about 132 kg of fuelwood per month, more than four times the amount consumed by urban households (32 kg). In terms of total energy use, biomass accounts for 89 percent of household energy consumption in rural areas and 35 percent in urban areas. However, the transition to modern fuels has been increasing. For cooking, urban households frequently use kerosene, along with LPG. Use of LPG among urban households is 71 percent, with monthly consumption averaging 9 kg (with an average consumption of 13 kg per household that actually uses the fuel). This compares to only 17 percent among rural households, whose monthly LPG consumption averages just 1.7 kg (with an average LPG consumption of 10.7 kg per user household).
According to the study, the provision of high quality energy services to rural areas has lagged behind urban areas. It is both financially and physically more difficult to service remote and poor populations compared to those living in urban areas. However, one would expect energy poverty would be commensurate with income poverty. This pattern is confirmed for urban India but it is not the case for rural areas. This means that despite national energy programs to help bring better energy services to people in rural areas, a significant gap in services still persists.
Besides providing electricity, improving biomass use and its efficiency is essential for reducing energy poverty. According to the findings, some 90 percent of rural households in India still use fuel wood that explains some 56 percent of household total expenditure on energy. Yet only less than 4 percent of rural households (according to the survey) had improved stoves for biomass use. Improving efficiency of fuel wood use for cooking is extremely.
The study says that for rural households, fuel wood constitutes the highest share of total energy expenditure, at 40 percent. This expenditure may not represent what households actually paid. Since biomass is mostly collected without direct cost, the local market price has been used to impute the value of biomass use in rural areas. For urban households, electricity is the highest energy expenditure, followed by LPG. Overall, urban households pay about Rs. 557 per month on energy, compared to Rs. 477 spent by rural households. Because of the higher use of biomass energy in rural areas, rural households actually consume more energy in total compared to urban ones.
However, this pattern is reversed when the efficiency of energy use is taken into consideration. After adjusting for efficiency of use, people in urban areas actually consume more end-use energy compared to rural households. The reason is because they use more modern forms of energy that offer a wider range of energy services.
The study concludes that though rural energy activities receive significant support from the Government of India, the findings would tend to confirm that there is still a long way to go to ensure that the rural poor can take advantage of the many benefits of modern energy and the services that they provide to consumers.
