Contribution of energy services to the Millennium Development Goals and to poverty alleviation in Latin America and the Caribbean
ECLAC, Club de Madrid, GTZ and UNDP
The energy debate has one dimension that is often sidelined: its relationship with poverty and development. This document attempts to shed some light on this aspect, unnoticed when public policies are being formulated.
The document describes the results of the joint effort of the Economic Commission for Latin America and the Caribbean (ECLAC), the United Nations Development Programme (UNDP) and the Club de Madrid, which highlight the crucial role of access to energy services in the attainment of the Millennium Development Goals.
Access to energy services, as a basic factor for poverty reduction and improvement of the environmental conditions of the socially most vulnerable groups, is a topic that is usually not featured prominently in official government policies. In the national development plans, poverty reduction strategies and energy plans and strategies of a large number of countries in Latin America and the Caribbean, the relationship between energy and poverty is not mentioned and, when it is, it is not dealt with in any depth.
There has been little research in Latin America and the Caribbean on the linkage between access to energy services and attainment of national goals for development, poverty reduction and environmental protection. This document shows that, despite the high rates of urbanization in Latin America and the Caribbean, almost 30 million people still do not have electricity, of whom 21.4 million (73 per cent) are poor. The lack of electrical services is directly related to poverty: it is estimated that, of the total poor in the region (200 million), about 10 per cent have no electrical services and this figure rises to 30 per cent in the case of the absolute poor.
A large number of households still do not have access to modern fuels for cooking; when they do, this accounts for a disproportionate share of their income, which exacerbates social inequity in the region. In addition, areas which have the largest per capita consumption of firewood generally have low human development indices. The largest number of families using firewood, in all the cases analysed, is usually found among the poorest inhabitants. Consequently, although access to energy for the poor sectors is not one of the Millennium Development Goals, it is undoubtedly a vital prerequisite for their attainment.
If the Millennium Development Goals are to be attained, the energy policy of States must give priority to the goal of providing access to energy services for the poor, at prices they can afford. For this reason, the energy policies of States cannot be viewed solely from the macroeconomic viewpoint or from the viewpoint of the major energy industries - oil, gas, nuclear or hydroelectric energy - and cannot be subsumed under the major topics such as energy security, geopolitical interests connected with these resources, or effects on climate change.
Increased access by poor sectors to energy services provides an opportunity for incorporating low-carbon and energy-efficient technologies, as well as renewable and decentralized energy sources in remote rural areas. In comparison with the contribution of the higher-income sectors to greenhouse gas emissions, elimination of energy poverty would have a marginal effect on national emissions, in view of the low participation of these sectors in total energy consumption.
All this presupposes a major change from the current view of this issue as being irrelevant: there must be a shift from neglect to active awareness, and particularly towards the expression of a clear political will to eliminate energy poverty as an integral part of the attainment of the Millennium Development Goals. There must be plans with clearly defined goals and quantitative and qualitative resource commitment, with implementation monitoring and evaluation. This will require better coordination between the various ministries, services and government agencies responsible for executing these policies; it will also require definition of areas of action and collaboration between the public and private sectors and between national efforts and international cooperation.
The State must carry on a proactive role in the energy sector. This role must come together with that of the private sector in a joint effort to achieve the goals of a sustainable and equitable energy policy. Specific goals should therefore be included regarding access to energy for sectors currently without access, and possible and desirable sources geared to the availability of resources and to economic, social and environmental conditions must be identified in each case. Similarly, regulatory frameworks should be established to protect poor consumes in order to guarantee access to clean, efficient and modern energy sources at affordable prices.
The design of policies for qualitative and quantitative access to energy, at prices suited to income levels, may have to include subsidies, both to facilitate access to energy sources and to purchase modern and efficient equipment so as to reduce families' total energy costs and help to alleviate climate change.
In the case of policies for rural areas, it will be necessary: (i) to identify mechanisms to guarantee the continuity and expansion of supply to households; (ii) to move towards programmes that ensure the provision of sufficient energy to improve the productivity of the economic activities of rural communities in order by this means to achieve poverty reduction; (iii) to promote replacement of firewood as an energy source wherever possible and, where this is not possible, use must be made sustainable by means of efficient equipment; (iv) to set thresholds for access to electricity so that sufficient power is provided for productive uses. On the other hand, in the case of urban areas, there will be a need: (i) to set basic consumption standards; (ii) to introduce reduced rates; (iii) to give consideration to cross subsidies; (iv) to adopt energy efficiency policies. Since programmes of this kind can have a considerable impact on total energy consumption, long-term overall and sectoral planning is needed in order for energy consumption to be sustainable.
Efficient and effective access to energy services is a vital requirement for attainment of the Millennium Development Goals, which in turn are intrinsically linked to the enhancement of human rights and of democracy. The countries of the region must therefore rise to the challenge of energy access in order to promote a decent quality of life and protect the rights of their citizens. To this end, it will be essential to formulate national, regional and international agendas that have a clear focus on this subject and that represent effective tools in efforts to combat poverty and inequity.