Energy Poverty in Wealthy Countries: 'Green' Policies Can Hurt the Poor While Assuaging the Guilt of the Wealthy, While in Poor Countries Energy Access is the Priority

Energy Poverty in Wealthy Countries: ‘Green’ Policies Can Hurt the Poor While Assuaging the Guilt of the Wealthy, While in Poor Countries Energy Access is the Priority

As a member of the middle class or even upper middle class I can say that I have been benefited by green energy policies. Simply due to having enough money to take advantage of ‘green’ policies like incentives for electric and hybrid vehicles, solar panels, and shallow home geothermal heat pump systems, I have been benefited while those too poor to purchase such vehicles or systems will not be benefited. It has even been shown that carbon taxes in several forms can end up hurting the poor and being more neutral to the wealthy.

Policy determination to alleviate energy poverty in developing countries is straightforward: let them, encourage them, and help them develop energy and electricity systems based on fossil fuels, preferably natural gas and where applicable (through price and local availability) coal. Renewables should also be encouraged but the priority for developing countries is energy access. In developed countries where energy access is universal the priorities are different: de-carbonize, transition to lower carbon fossil fuels (typically from coal to natural gas where applicable), upgrade the grids to smart grids, enhance grid integration of renewables, and invest in efficiency. The authors and editors of the book, Climate Pragmatism, note that priorities for energy access in developing countries should emphasize typically cheaper fossil energy over renewables and this includes when funded by NGOs or entities like the U.N. While giving very limited solar energy components to rural residents of African countries with poor electricity access can be useful it is better for them and their societies as on the whole to have access to modern grid electricity.

However, there is some energy poverty in wealthy countries and there is potential for more. In fact, green policies can increase energy poverty in some cases. Most of us know people who have trouble paying electric and winter heating fuel bills. The U.S. does offer home energy assistance to the poor but often the funds are used up quickly, and the annual application process can be cumbersome for some. This is usually through HEAP, the Home Energy Assistance Program. This is a subsidy for the poor, although oddly some who rail against energy companies count it as a subsidy for energy companies. If fuel and electricity prices go up due to renewables mandates, carbon taxes, carbon markets, and increasing costs of renewables integration then that disproportionately affects poor people. Also true is that poor people often live in houses and apartments that are not energy efficient so they can pay more for heat.

Globally, energy poverty is defined as spending more than 10% of one’s income on energy. By that definition there is significant energy poverty in wealthy countries. Obviously, people with lower incomes will spend a higher percentage of that income on energy since energy prices are generally the same for all.

Another rather obvious issue is incentives for things like home PV solar systems, geothermal heat pumps, electric and hybrid vehicles. Those who can afford to shell out for these purchases are the ones who benefit. It is quite rare for the poor since the upfront costs are quite high compared to non-green energy and autos. Incentives work almost exclusively for the wealthy and so they are basically a subsidy to the wealthy.

Bjorn Lomborg’s WSJ article referenced below suggests that committing to the Paris Agreement means a potential 0f $1 trillion per year in slower economic growth and higher energy prices. There is no getting out of climate change policies being expensive, so we probably need to de-carbonize wisely, gradually, and without undue economic disruption. While Lomborg believes technology will eventually come to the rescue others are not so sure. He favors more green energy research as do Bill Gates and others. He also notes that the U.N. climate change panel estimates that damage from global warming will add up to 2% of global GDP by the end of the century, which is quite manageable and not quite apocalyptic. This is significantly less than the damage from the 2008 financial crisis. We can control energy costs now which help the poor now. We don’t really know the costs of damage from global warming but the estimates thus far are not at all problematic in comparison. Lomborg also says that in the winter of 2014-2015, 15,000 people died in the U.K. died from lack of ability to heat their houses as reported by The Independent. Frankly, I find that very hard to fathom. I would think that if 15,000 died, presumably freezing to death or somehow otherwise affected by the lack of heat to cause their deaths, that the world would know about it more intimately and that there would be outrage that a modernized wealthy country could allow such to happen. I suspect BS there but have not investigated.

Right now one could make a case that New York governor Andrew Cuomo, Senator Bernie Sanders, Bill McKibben, and others in the ‘Keep It In the Ground’ movement are both increasing energy prices (and thus energy poverty) and directly causing unnecessary climate and environmental impacts. How? By influencing the delay and potential banning of needed natural gas pipelines to the New York and New England regions. New York electricity is 40% nat gas and residential heat is over 50% nat gas. New England electricity is 50% nat gas except when it is unavailable due to not enough incoming pipelines so that diesel (No. 2 fuel oil) is used instead in the many dual-fuel (nat gas and diesel) plants in the region. This happens repeatedly during cold snaps and is not likely to change anytime soon. Thus, instead of keeping it in the ground they are favoring a fuel with more climate and environmental impacts and one that costs considerably more. The northeast region is not particularly well-suited for solar nor wind (except maybe offshore) so natural gas truly is needed there and will likely be for years and at least a few decades to come.

In Southeast Asia and other tropical regions, energy access, particularly fossil energy access, will continue and should continue. People want air conditioners so they can have some comfort in hot tropical conditions. The problem is exacerbated in various ways: people are moving en masse from the country to the city. The added population has meant more building and less trees and greenery that helped to cool the urban areas. Thus, the urban heat island effect makes the problem worse and potentially deadly during heatwaves. While limiting and phasing out things like HFCs and making better and more efficient A/C and cooling systems will help, there will still be many new coal-fired plants built in these regions and imported liquified natural gas (LNG) to power some gas-fired plants. Solar can help also since its peak production usually coincides with the hottest part of the day where A/C use is the highest. According to one estimate the amount of air conditioners globally is expected to triple by 2050 to 2.5 billion. Three quarters of India’s electricity comes from coal and that is not expected to change anytime soon but demand for power is expected to increase significantly since about half of peak energy load in summer is from air conditioning.

There is also some energy poverty here in the U.S. I know one person who spends between a third and a half of his SSI income on energy in the winter. I visited him once when he was out of propane, where he was wearing long underwear, multiple layers of clothing, coveralls, and a hat covering his ears while inside and still freezing.

References:

Climate-Change Policies Can Be Punishing for the Poor – by Bjorn Lomborg, in Wall Street Journal (op-ed), Jan. 4, 2018

Climate Pragmatism (Rightful Place of Science series) – edited by Jason Lloyd, Daniel Sarewitz, Ted Nordhaus, and Alex Trembath (2017 - Consortium for Science, Policy, and Outcomes, Arizona State University

One Appliance Could Determine Whether India, and the World, Meet Climate Change Targets – by Shashank Bengali, in Los Angeles Times, Jan. 7, 2018