Energy has multifaceted roles to exhibit in terms of facilitating the overall development of an economy [1
]. Nevertheless, the International Energy Association (IEA) predicted that around 2.6 billion of the global population are adversely impacted by energy poverty [3
]. Energy poverty is conventionally interpreted as insufficient access to modern and cleaner energy resources at low prices [4
]. Therefore, enhancing access to these energy resources can also be hypothesized to play a major role in mitigating overall poverty within an economy [5
]. In relevance to achieving the Sustainable Development Goals (SDG) agenda, the seventh SDG (SDG7) has called upon the global economies to improve access to affordable, reliable, sustainable, and modern energy for their respective populations. Consequently, it can be thought that alleviating energy poverty is one of the major means through which the objectives of the 2030 SDG agenda of the United Nations can be realized.
In comparison to developed nations, the energy poverty scenario is relatively concerning for underdeveloped economies due to the developing nations being traditionally reliant on unclean fossil fuels. The fossil fuel dependency in these nations can be expected to give them a comparative advantage in terms of being able to generate electricity using the indigenous fossil fuels at a relatively cheaper rate than producing electricity utilizing the modern renewable energy sources. Under such circumstances, the energy poverty scenario, using the electrification rate as an indicator, may reflect the true state of energy poverty. This is because in countries such as China, in spite of ensuring 100% electrification rate, lack of access to modern and cleaner energy for the population classifies China as energy poor; particularly taking the adverse environmental consequences of fossil fuel use into consideration. In line with this notion, it can be said that due to the extensive reliance of the developing countries on traditional fossil fuels for meeting their respective energy demands, their energy poverty reduction performances are not so impressive.
Mitigating energy poverty, apart from achieving energy security, is of paramount importance for the developing nations in order to attain the targets of SDG13, which aims to establish environmental sustainability worldwide [6
]. This is because a decline in the energy poverty level is synonymous with a reduction in the use of conventional fossil fuels which, in turn, can be expected to curb the fossil fuel consumption-induced greenhouse gas emissions to restore environmental well-being [7
]. On the other hand, as far as the human health impacts of energy poverty are concerned, it is acknowledged in the literature that the energy-poor countries often depend on unclean fuels for cooking purposes. Therefore, exposure to harmful emissions stemming from the combustion of those unclean cooking fuels is likely to inflict detrimental consequences to human health, especially worsening the health of women [9
]. Moreover, transitioning from unclean to cleaner cooking fuels, as a mechanism of energy poverty reduction, is a cumbersome task for the developing nations, considering that these nations face multidimensional constraints that have traditionally upheld the clean cooking fuel transition [10
The issue of extreme energy poverty has become a major concern for the Sub-Saharan African (SSA) nations as the majority of the population living in this region are characterized as energy poor [11
]. As far as access to electricity is concerned, the average rate of electrification across the SSA countries is merely 43% as opposed to the corresponding global electricity access rate of more than 85% [12
]. Besides, since the majority of the SSA nations are fossil fuel dependent, it is evident that the access to electricity generated from the modern cleaner energy sources is also significantly low. As per the World Bank [13
] estimates, the average share of fossil fuel in the aggregate electricity output of the SSA nations was around 65%, which reflects the prevalence of energy poverty across this region. Besides, on average, almost 50% of the aggregate electricity output of the SSA countries is generated from combusting coal [13
]. In addition, almost 900 million people (approximately 85% of the population) in this region are without access to clean cooking fuels [14
]. Accordingly, the existing literature has highlighted the health concerns associated with the use of unclean cooking fuels across Africa [15
]. Besides, 10 of the top-20 global economies with outrageously large shares of the respective population not having access to clean modern fuels for cooking purposes belong to the SSA region [14
Furthermore, it is believed that the level of energy poverty across the SSA region has aggravated over the years courtesy of the high population growth rates in the associated countries as opposed to the slow growths in the overall supplies of energy, let alone clean energy supplies. At the same time, the conventional energy resources employed in these countries are of low-efficiency levels [4
]. Accordingly, the industrial processes of these nations have traditionally been highly energy-intensive with low levels of energy efficiency [17
]. Moreover, compared to developing countries belonging to East Asia and the Pacific, Europe and Central Asia, Latin America and the Caribbean, and the Middle East and North Africa, the average energy efficiency level of the SSA developing countries is relatively lower [13
]. On the other hand, the inefficient use of energy across the SSA region can also be understood in the context of the low levels of energy intensity. Although the global energy intensity levels have increased between 2010 and 2018, the rate of improvement in the intensity of energy use has been the lowest in the SSA nations [14
Hence, underscoring the relevance of alleviating energy poverty, this study aims to scrutinize the impacts of energy efficiency improvement and other key macroeconomic aggregates on the level of energy poverty in 36 SSA countries between 2000 and 2016. This study is motivated by the prediction that the overall energy demand in Africa would increase by a staggering 85% over the 2010–2040 period [18
] which, in turn, is expected to further aggravate the energy poverty scenario across this region. Besides, given the majority of the SSA nations are predominantly fossil fuel-dependent, it is pertinent to assess whether energy efficiency gains can be effective in mitigating the degrees of energy poverty in the economies of concern. Additionally, the outcomes from this study are expected to unearth critically important energy policy implications in respect of improving energy efficiency levels with the aim of ensuring energy security through energy poverty alleviation. Moreover, this study is also relevant from the perspective of attaining several of the SDG by the selected SSA nations.
This current study contributes to the literature in several ways. Firstly, this study evaluates the accessibility to modern energy resources dimension of energy poverty in the SSA countries context. The preceding studies have conventionally measured energy poverty in terms of electricity access rate for the population of the respective SSA nations [19
]. Besides, the energy poverty analysis for the cases of the SSA and other developing countries has been extensively analysed at the household level [21
]. As opposed to the approaches adopted in these preceding studies, this current study uses the access to clean fuels and technology for cooking rates of 36 SSA countries to proxy for energy poverty and conducts the analysis at the macroeconomic level. Secondly, to the best of the authors’ knowledge, this is the seminal study that scrutinizes the impacts of energy efficiency gains on the energy poverty levels of the selected SSA nations. However, improving energy efficiency is often recommended as a means of reducing energy poverty [23
]. It is of greater relevance for the SSA countries because the energy demand across this region is said to be persistently growing with time; however, the energy supplies, both traditional and modern ones, are not likely to match the rate of growth in energy demand. Under such adverse circumstances, energy efficiency can be hypothesized to work as demand-side management of energy poverty in this region. Lastly, this further contributes to the literature by exploring the possible non-linearity of the energy efficiency-energy poverty nexus. This is important because energy efficiency gains within the developing countries in particular may not be initially sufficient for curbing energy poverty; however, persistent improvement in energy efficiency can be expected to eventually mitigate energy poverty in these nations.
The subsequent sections chronologically summarize the relevant literature, highlights the empirical model, and describes the data attributes used in this study, discuss the econometric methodology employed, report and analyse the findings, and conclude with precise policy recommendations.
2. Literature Review
Although there is no universal definition of energy poverty, the existing studies have predominantly viewed energy poverty as lack of access to energy resources in general. However, in modern times, simply enhancing energy access rates is not sufficient in addressing the energy poverty reduction challenges. Hence, apart from increasing energy access, it is also necessary to enhance access to modern and cleaner energy resources. Yet, the existing literature is saturated with studies that have evaluated the macroeconomic determinants of energy poverty in respect of the overall access to energy resources for a given population. Among these, Trotter [19
] used annual data from 1990 to 2010 for 46 SSA countries to evaluate the determinants of rural electrification. The authors measured energy poverty in terms of the rural electrification rates and the ratios of rural and urban electrification rates and found that good governance is pertinent for curbing energy poverty in the rural areas of the selected SSA nations. In another study featuring South Africa, Sarkodie and Adams [20
] used the overall electrification rate to indicate the level of poverty in South Africa between 1990 and 2017. The findings portrayed that greater economic growth and income inequality enhances energy poverty while controlling corruption is effective in reducing energy poverty in this SSA country. Similarly, referring to electricity access as a measure of energy poverty from the SSA countries perspective, Falchetta et al. [25
] recently opined that private investments in the electricity sector is crucial for achieving a 100% electrification rate; accordingly, the authors highlighted the need for mitigating regulatory, market, and governance risks to further enhance the access to electricity for the people in this region.
Similar studies on energy poverty have also been conducted for non-SSA nations. In a study on 80 villages in the Bihar district of India, Oda and Tsujita [26
] concluded that rural electrification rate is high across villages that are in proximity to the national grid while low electrification rate was prominent for remote villages. Similarly, in the context of Brazil, Goldemberg et al. [27
] asserted that initiating relevant electrification policies reforms and overcoming the institutional and regulatory barriers is necessary for expanding electricity access across the rural neighbourhoods of Brazil. In another relevant study on Small Island Developing States of the Pacific, Dornan [28
] argued that regulatory reforms within the energy sector facilitate rural electrification. Besides, the authors also concluded that extension of the national grid is not entirely effective in boosting access to electricity for the rural population; rather, off-grid electrification initiatives are more appropriate in improving electricity access across rural areas.
A plethora of the preceding studies have analysed energy poverty at the household levels, especially in the context of developing economies. In the context of the SSA nations, Adusah-Poku and Takeuchi [29
] used national household survey data for Ghana and found that access to electricity, within the rural households, is positively determined by higher household expenditure levels, the employed status of the household members, and the gender of the household’s head. In another study on the household energy poverty determinants in Senegal and Togo, Gafa and Egbendewe [30
] stated that energy poverty, in terms of the affordability to consume energy resources, is reduced when women and men make joint decisions concerning the purchase of energy resources. Besides, the authors also claimed that affordable pricing of energy resources is effective in curbing the energy poverty levels further. Apart from these two factors, the authors stressed that household income level and fertility also determine the incidence of energy poverty within the rural households of Senegal and Togo. On the other hand, Ashagidigbi et al. [31
] used the ratio of energy-poor households in the total number of households to measure energy poverty in Nigeria and found that energy poverty is determined by the location of the household as rural households were evidenced to be relatively more energy-poor compared to the urban households. Besides, male-headed households and an older household head were identified as the key drivers of energy poverty in Nigeria. In contrast, higher household income levels and access to microfinance were asserted to be effective in curbing energy poverty.
As far as the determinants of energy poverty within the households of non-SSA countries are concerned, Kemmler [32
] evaluated the determinants of household energy access to scrutinize the factors influencing the degree of energy poverty in India. The authors claimed that the government of India reports inflated official electrification rates in Indian villages. The findings also revealed that household electrification in rural areas of India largely depends on specific household characteristics, the extent of electrification within a community, and the quality of electricity supplies. Additionally, household expenditure level and traffic imposed on electricity consumption were found to exert nominal influences on access to electricity amidst the households. In another study on Pakistan, Qurat-ul-Ann and Mirza [33
] also proxied energy poverty using the ratio of energy-poor households in the total number of households and found that households that are male-headed, foreign remittance-recipients, and are in proximity to the nearest markets are more likely to be energy poor. Conversely, Pakistani households with elderly and more educationally qualified household heads are less likely to be energy poor. Recently, Drescher and Janzen [34
] concluded that household energy poverty in Germany is determined by the educational qualifications and employment status of the household members. Besides, the authors added that energy-efficient housing arrangements are also effective in reducing energy poverty within German households.
Several studies have also modelled the determinants of household fuel choices to understand the factors which affect the affordability dimension of energy poverty. It is believed that affordability concerning the consumption of clean cooking fuels is a key aspect of energy poverty. It has been acknowledged that switching to cleaner cooking fuels is not only effective in curbing energy poverty across the SSA economies but also has health and environmental benefits [35
]. Accordingly, the fuel-switching behaviours among the SSA households were explored. Wassie et al. [36
] remarked that rural households in Ethiopia are predominantly reliant on biomass for cooking purposes. However, the authors emphasized that the transition to cleaner cooking fuel alternatives among these rural households is influenced by the distance covered for harvesting firewood. Besides, households with higher income levels and educational achievements were said to be more likely to consume cleaner cooking fuels. In an another study on household energy poverty at the household level, Behera and Ali [37
] showed that traditional solid cooking fuel-dependency of households across the SSA region depends on the gender of the household head and the location of the household; male-headed and rural households were said to be more likely to use the unclean cooking fuel sources while wealthy and educated households are more likely to use the cleaner alternatives. Furthermore, the authors also mentioned that the probability of consuming cleaner cooking fuels is relatively higher for households living close to the market.
Using household data on Nigerian households, Nwaka et al. [38
] concluded that compared to de-jure female-headed households, the probability of using cleaner cooking fuels is relatively higher for de-facto male and female-headed households. On the other hand, referring to Liquefied Petroleum Gas (LPG) as a relatively cleaner cooking fuel for households in Cameroon, Pope et al. [39
] highlighted that those households with higher educational qualifications and greater ownership of assets and wealth increase the probability of switching from the use of traditional solid cooking fuels to LPG. Twumasi et al. [40
] also analysed the energy poverty scenario in the context of Ghanaian households and found that apart from certain household characteristics and socioeconomic factors, higher access to credit motivates the household to use cleaner cooking fuels such as LPG and kerosene. Besides, Olang et al. [41
] opined that the choice of cooking fuels for the Kenyan household depends on the location of cooking. Moreover, the authors also advocated in favour of enhancing access to modern fuels for cooking and lighting purposes is necessary for reducing household energy poverty in Kenya.
Apart from the SSA nations, similar household-level energy poverty studies were also conducted for the developing nations outside Africa. In the context of Afghanistan, Paudel et al. [42
] found evidence of household poverty reduction and higher educational qualification of the household members enhance the probability of using cleaner cooking fuels while households with aged household heads and a higher number of family members are more likely to rely on the traditional unclean cooking fuels. In another relevant study for the case of India, Sharma et al. [43
] asserted that the willingness of households to pay for LPG for cooking purposes positively correlates to the monthly income level of the respective households. Besides, the authors also added that a lower distance between the household’s location and the LPG selling agencies also increases the possibility of using LPG among the Indian households. Furthermore, it was also mentioned that the Indian household’s decision to switch to LPG was mostly taken by the female household members; this portrayed a gendered impact concerning energy poverty reduction in India. Similarly, Imran and Ozcatalbas [44
], in the context of Pakistan, concluded that greater access to LPG is one of the prime factors which motivate households to switch from the use of solid biomass and crop residues to LPG for cooking purposes.
Likewise, Acharya and Marhold [45
] showed that higher education levels of the household members are likely to facilitate the adoption of LPG as a cleaner cooking fuel while house ownership was said to enhance the probability of using the traditional cooking fuels. Moreover, greater access to information and communications technology was also remarked as stimulating the adoption of LPG in Nepal. In another relevant study for Indonesia, Andadari et al. [5
] claimed that enhancing access to LPG for Indonesian households is an effective means of mitigating energy poverty. The study evaluated the impact of the government’s decision to execute an LPG adoption program on the cooking fuel-switching behaviour within Indonesian households. The findings revealed that the initiative motivated the households in Indonesia to replace the use of kerosene with LPG for meeting their cooking fuel demand. Liao et al. [46
] pointed out that although China has ensured a 100% electrification rate, this scenario does not provide a clear understanding of the nation’s energy poverty scenario as a significant proportion of the Chinese population still uses firewood and other traditional solid cooking fuels. Hence, considering the affordability and accessibility of modern cooking fuels, China can be considered energy poor. Among the other key findings, the authors asserted that a transition from farm to non-farm employment is associated with a transition from traditional to modern cooking fuels as well. However, the gender of the household head and the size of the household were said to be ineffective in facilitating the clean cooking fuel transition.
Therefore, it is clear from the above-mentioned studies that the energy poverty-related studies in the context of the SSA nations have mostly focused on the electrification rates as a measure of energy poverty. Consequently, the access to cleaner energy resources aspect of energy poverty is yet to be extensively explored in the literature. On the other hand, the literature review also suggests that the energy poverty analysis for the SSA nations has largely been conducted at the household level which is evident from the plethora of the preceding studies on the clean cooking fuel-switching mechanisms within the SSA households. However, it is also important to assess this aspect of energy poverty at the macroeconomic level which has largely been overlooked in these studies. Macroeconomic analysis of the determinants of energy poverty is important because it would help us to understand how the energy systems in the SSA nations, as a whole, function to manage the aggregate demand and supply of modern energy resources for the overall population of the respective economies. This is also important from the perspective of relevant public policy-making purposes since government policies are often conceptualized to maximize collective well-being rather than specifically focusing on each individual within the economy. Furthermore, the review of the literature also portrays that none of the previous studies have explored the impacts of energy efficiency gains on the energy poverty figures of the SSA countries. Hence, to address these gaps in the literature, this study scrutinizes the impacts of energy efficiency gains and other macroeconomic variables on the rate of access to clean fuels and technologies for cooking purposes in the context of 36 SSA countries between 2000 and 2016.
Energy poverty alleviation has become a major global policy agenda to which the SSA nations are no exception. Although energy poverty can embody several forms, inadequate access to modern energy resources is often classified as an indicator of energy poverty. In the context of the SSA nations, the energy poverty scenario can be understood by their predominant reliance on traditional and unclean cooking fuels such as solid biomass, firewood, and kerosene. Besides, the consumption of these fuels has not only compromised the overall well-being of the environment but has also affected the quality of health across this region. Hence, this study evaluated the impacts of energy efficiency gains and other key macroeconomic variables on the incidence of energy poverty in 36 SSA countries over the 2000–2016 period. Diverging from the conventional approach of measuring energy poverty in terms of the electrification rates, this study used the ACCFT as a proxy for energy poverty in order to unearth the macroeconomic factors that can initiate the clean cooking fuel transition in Africa.
The econometric strategy was designed to account for the cross-sectional dependency and slope heterogeneity issues in the data. The findings from the analysis, in a nutshell, revealed that energy efficiency gains initially reduce the ACCFT while increasing it later on; thus, the energy efficiency-ACCFT nexus depicted a U-shaped relationship. In this regard, the predicted threshold levels of energy efficiency are found to be lower than the average energy efficiency level of the SSA nations taken into consideration. Besides, economic growth, CO2 emissions, FDI inflows, and international trade were identified as key factors responsible for enhancing ACCFT in the SSA countries of concern. However, financial development was found to be ineffective in influencing the ACCFT. In line with these findings, several policy-level suggestions can be put forward in respect of energy poverty alleviation in this region.
Firstly, since the energy efficiency-ACCFT nexus is evidence to portray a U-shaped relationship, it is pertinent for the selected SSA nations to persistently improve their energy efficiency levels. Hence, investment in projects associated with energy innovation can be a credible means of uplifting the existing energy efficiency levels. Besides, investments in research and development for achieving energy efficiency gains can also be considered to enhance the ACCFT further. Accordingly, the implementation of these energy efficiency-enhancing policies can be expected to help the SSA nations achieve the average energy efficiency level required to enhance the ACCFT. Secondly, these nations should also aim at increasing their respective economic growth rates which, in turn, is likely to enhance the ACCFT to initiate the clean cooking fuel transition in this region. However, it must be ensured that the growth policies encourage efficient use of energy within the production processes which would not only expedite the economic growth rates but would simultaneously tackle the energy poverty scenario.
Thirdly, it is important for the SSA countries to enhance awareness regarding the environmental adversities linked with CO2 emissions. If this can be ensured, it can motivate the energy consumers to use energy more efficiently and also replace the consumption of traditional cooking fuels with modern alternatives. Fourthly, it is also essential for the SSA nations to further financially globalize their respective economies, especially by attracting cleaner FDI for the development of clean cooking fuel technologies. Moreover, the FDI should also be directed at projects which can help these nations to improve their energy efficiency levels to further enhance the ACCFT. It can be expected that both energy efficiency gains and greater FDI inflows can jointly help to enhance the ACCFT in the selected SSA countries. Fifthly, these countries should also consider liberalization of the duties and tariffs levied on clean cooking fuel imports to further enhance the ACCFT. In addition, intra-regional trade of modern cooking fuels can also be expected to exert similar impacts across this region. Lastly, the SSA nations should try and develop their financial sectors so that private investments for clean cooking technology development and energy efficiency improvement can be undertaken.
Among the few limitations faced while conducting this study, the unavailability of data restricted the sample size of the SSA nations. Besides, this limitation has also prevented us from conducting country-specific time series analysis of the effects of energy efficiency gains on energy poverty for the individual SSA nations. Such country-specific analysis could have given us an indication whether the energy efficiency-ACCFT nexus is homogeneous or heterogeneous across the SSA nations considered in this study. Besides, another limitation of this study is that only the direct impacts of energy efficiency are considered while the interaction effects (or indirect impacts) of energy efficiency and other key macroeconomic variables on ACCFT are not highlighted. As far as the future research directions are concerned, this study can be extended to assess these possible interaction effects. Moreover, this study can also be replicated for other energy poverty-stricken global regions containing similar developing nations.