Barriers to Enhancing Energy Access for Households in India and China Shonali Pachauri May Presented at Cape Town

Outline of the Presentation Background on poverty in India and China Overview of household energy use patterns and transitions in India and China Barriers to enhancing energy access for households – some general issues with examples from India and China

Poverty Still a Concern and Concentrated Mostly in Rural Areas Data Source: Ravallion et al. (2007) 60% of the world’s poor live in China and India Of the total 2.3 billion inhabitants, nearly 1.5 billion earn less than $2 per day

Mapping Energy Poverty Taxonomy based on final energy availability and share of non-commercial energy Billions of people: Abject poverty: 1.3 Poor: 0.6 Less poor: 1.4 Middle class: 1.4 Rich: Source: Gruebler et al, 2008

Pattern of Household Final Energy Use in 2005 Data Source: Pachauri & Jiang 2008

Energy Transitions in Urban & Rural India and China Source: Pachauri & Jiang 2008

Energy Access Across Rural Household Quintiles Data Source: Pachauri & Jiang 2008.

Consumption of Modern Energy in Rural China & India Source: Pachauri & Jiang 2008

Energy Use Patterns - Urban Quintiles in India & China Source: Pachauri & Jiang 2008

Fuel Choices by City in India and China Source: Pachauri & Jiang 2009

Energy Distribution for Indian Households Source: Pachauri 2007

Changes in Energy Poverty in Indian Households Source: Adapted from Pachauri et al 2004

BARRIERS TO ENHANCING ACCESS

Issues with Differences in Definitions of Access Physical access to energy Economic access to energy – –Affordability of the fuel or energy type –Affordability of a connection and equipment Unmetered access – –Illegal connections Connections through a central supply or grid or through distributed generation Access to high quality and reliable energy – quality of supply

Informational Barriers Definitions might differ and change –Village connections or household connections –Only central grid connections or decentralized distributed generation options Source: Pachauri & Mueller 2009

Economic Barriers – Investments Source: Ministry of Power All figures in billion INR GenerationTransmission DistributionRural Electrification Required investment in Indian Power Sector (Next 3 to 5 years)

Some Annual Cost Comparisons to 2015 $ Billion Providing LPG Stoves and Canisters to 2.5 billion Data Source: Various Cost Comparisons Access to LPG

Economic Barriers – Pricing of Energy and Affordability Pachauri & Spreng 2004

Economic Barriers – Access to Credit In addition to cost of fuels, upfront costs of connections and equipment are a significant share of the incomes of poor households Poor households are cash poor and do not receive a steady reliable income stream, so require access to ready and cheap credit

Institutional & Market Barriers Poor market development and lack of confidence for private sector investment –working in poor and low population density areas makes it more difficult for private entrepreneurs to sustain a profitable operation. – Often local public sector and entrepreneurs are not involved Many cases of successful pilot projects but poor replicability and scale-up

Political and Policy Barriers Political rhetoric resulting in setting unrealistic targets and in poor implementation of programs Low follow up and poor monitoring mechanisms Pricing of fuels often decided on considerations of winning the populist vote Subsidies often mistargeted and have other unintended consequences

Key Messages Integrating energy into overall development and recognizing diversity of approaches in service deliveryIntegrating energy into overall development and recognizing diversity of approaches in service delivery Demanding more institutional leadership and critical roles for the public sector also in public-private partnershipsDemanding more institutional leadership and critical roles for the public sector also in public-private partnerships Widening the policy “spectrum” and putting more emphasis on learning-by- doing capacity developmentWidening the policy “spectrum” and putting more emphasis on learning-by- doing capacity development