Energy Poverty in the Arab World: The Case of Yemen

The twin challenges of securing energy supplies and tackling climate change have dominated the international energy agenda in the last few decades. An often neglected, but equally important, challenge is ensuring access for billions of people to modern forms of energy such as electricity and liquid fuels. Current estimates indicate that more than 1.5 billion people in the developing world have no access to electricity, while 2.5 billion people rely on traditional biomass and 0.4 billion rely on coal for heating and cooking.

While much of the emphasis of the literature on energy poverty is on the prevalence of the phenomenon in sub-Saharan Africa and South Asia, little has been written about energy poverty in the Arab world. Traditionally having being seen as one of the world’s most energy rich regions, the Arab world has in recent years often been overlooked as a region which suffers severely from energy poverty itself. In 2002, about 65 million people in the Arab world had no access to electricity, and an additional 60 million were severely undersupplied in both urban and rural areas. While the region can reflect on some important achievements in terms of electrification rates, these rates vary considerably – between 100 per cent in some countries such as Kuwait, to 7.7 per cent in Comoros, Djibouti, Mauritania, and Somalia. In terms of cooking and heating, almost one-fifth of the Arab population rely on non-commercial fuels like wood, dung, and agricultural residues, particularly in Comoros, Djibouti, Sudan, Yemen, and Somalia but also in Algeria, Egypt, Morocco, and Syria.

This study fills a gap in the existing literature by looking at the case of prevailing energy poverty in Yemen, one of the poorest countries in the Arab world. Yemen’s energy poverty is widespread and severe, particularly among the country’s rural population and the poor which, according to the most recent data, comprise nearly half of the population. Energy poverty expresses itself in the lack of access to sufficient energy for cooking, lighting, heating, and cooling at the household level, as well as by many public service providers such as hospitals, health centres, schools, and mosques. It also consists of lack of access to better quality fuels – such as LPG for household use and electricity for lighting – which provide safer, cleaner, and more efficient energy than many traditional fuels. Particularly appalling in Yemen is the low rate of electrification, with nearly half the population lacking access to electricity. Businesses and industries also suffer from this situation, which makes energy poverty effectively a problem for Yemen’s entire economy – a paradox given that Yemen is an energy exporter of both natural gas and crude oil.

The main causes of energy poverty presented in this report are complex, but it appears evident that widespread total poverty levels in Yemen comprise perhaps the most critical cause of energy poverty. The complete range of factors that determine fuel access and fuel choice includes the following: household income, by determining the amount of money a household can spend on purchased energy; availability of necessary infrastructure and other incentive structures to make use of more costly forms of energy; fuel price and the cost of the necessary equipment to use the fuel; and individual household preference. The combination of these factors explains why Yemen’s pattern of energy use does not involve am automatic move along the energy ladder – the full replacement of inferior, traditional fuels by more modern, more efficient fuels alongside income growth. Rather, most fuels tend to be used to some extent in all income groups, but the amount used as a share of total consumption differs.

Yet, energy poverty must not only be seen as a symptom of income poverty. Energy access, both to sufficient quantities and to higher quality fuels and electricity, must also be seen as a necessary condition for human development, and hence poverty alleviation. Hence, a two-way relationship can be observed between human development and energy access, where sufficient access to modern forms of energy to a large extent condition progress in poverty alleviation – such as universal access to sufficient levels of nutrition, basic health care, and education, and to means of communication with the outside world. Alleviating energy poverty must hence be seen as a critical step towards achieving the UN Millennium Development Goals to which Yemen subscribed.

This report looks also at the issue of pricing energy in Yemen, and the impact of the government’s substantial subsidies on liquid fuels and electricity. The report finds that, in light of the size of energy subsidies in Yemen, the continued widespread observation of energy poverty suggests that energy subsidies have not helped improve energy availability in Yemen over the years, especially in terms of improving access to electricity. In fact, one could argue that subsidies may have limited investment in infrastructure and diverted funds away from key sectors, such as health and education, which are essential for poverty eradication. Care must be taken, however, with demands for a quick and total elimination of these subsidies. Fuel subsidies in particular have become the most important social safety net for the poor, and hence any removal of subsidies must be accompanied by corresponding expansions of other forms of social welfare, in order to prevent increasing the incidence of poverty, and to avoid severing the poorest people’s access to energy.