The transition to modern energy services

As poor families in developing countries gradually increase their incomes, they can afford more modern appliances, and they demand more and better energy services. But the transition from traditional biomass use to full dependence on modern energy forms is not a straight-line process.

The three main determinants in the transition from traditional to modern energy use are fuel availability, affordability and cultural preferences. If a modern distribution system is not in place, households cannot obtain access to modern fuels, even if they can afford them. LPG penetration rates are slow in many developing countries, partly because distribution infrastructure is lacking.

The affordability of energy-using equipment is just as important as the affordability of fuels and the initial cost of acquiring kerosene and LPG stoves may discourage some people from switching away from biomass. In some cases, traditions determine the fuel choice regardless of fuel availability and income. In India, even very rich households keep a biomass stove to prepare traditional bread.

Figure 4 is a representation of the typical fuel transition in poor households as their income rises (the actual transition is much more dynamic, as nearly all households opt for a combination of fuels) . Very poor households can satisfy only their most basic needs: heating, cooking and lighting. Their fuel choices are restricted mainly to different forms of biomass. As their income increases, their fuel choices widen. The incremental energy needs of the highest-income households, whose use of biomass is minimal, tend to be met by electricity. The share of basic needs in total consumption falls off sharply as families grow more prosperous.

Figure 4
Illustrative example of household fuel transition

Source: WEO 2002

There are also rural-urban differences in the fuel choices, as in rural zones availability of fuels is the main determinant while in cities consumption patterns are more likely to be affected by relative fuel prices.

Figure 5 plots average final energy consumption per capita for 100 developing and transition countries, grouped according to the percentage of their population under the poverty line ($2 a day).In countries where less than 5% of the population is poor, per capita energy consumption is four times higher than in countries where more than 75% of the population lives under the poverty line.

Consumption of commercial fuels, especially oil products, is much higher in the richest group of countries, partly because transport demand rises with income. LPG and kerosene are transition fuels in households: their consumption is higher for the intermediate groups, but lower for the richest citizens, who replace them with natural gas and electricity. The share of biomass in final energy consumption is lowest in countries where the percentage of poor people is lowest.

Figure 5
Average per capita final energy consumption and share of population living under the poverty line (2000)

Source: WEO 2002

Reliance on traditional biomass: current situation and prospects to 2030

Cooking a meal, a daily and routine task, can be a difficult chore and a danger to human health in some parts of the world. Today 2.5 billion people, or 37% of the world’s population rely on biomass  as their primary fuel for cooking. Over half of those people live either in India or Sub-Saharan Africa.

Reliance on biomass has harmful effect on health and environment (See Implication of energy poverty on health & environment).
As incomes increase, fuel switching occurs from biomass to modern forms of energy.

Nonetheless, limited availability and reliability of supply of alternative fuels can prevent or limit the transition.
In the Reference Scenario, the number of people depending on biomass for cooking is expected to rise to around 2.7 billion in 2020, before stabilising close to that level for the remainder of the Outlook period. However, these global trends mask significant changes at the country/regional level.

The number of people depending on biomass increases steadily in Sub-Saharan Africa, from 608 million today to 765 million in 2030, by which time 30% of the people using biomass worldwide live in the region. In developing Asia, the number of people using biomass increases from 678 million today to 731 million in 2030. In contrast, in China the number of people reliant on biomass has already peaked and continues to decline through to 2030. In India the number of people depending on biomass declines after 2020 as the country (like China) experiences a gradual transition towards modern fuels.