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Energy Poverty in the Arab World: the Case of Yemen

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Energy Poverty in the Arab World: the Case of Yemen Energy Poverty in the Arab World: The Case of Yemen Laura El-Katiri (Oxford Institute for Energy Studies) & Bassam Fattouh∗ (Oxford Institute for Energy Studies & School of Oriental and African Studies, University of London) August 2011 MEP 1 ∗ Corresponding Addresses: Bassam Fattouh, Director of the Oil & Middle East Programme, Oxford Institute for Energy Studies; 57 Woodstock Road, Oxford OX2 6FA,United Kingdom; Tel: +44 (0)1865 311377 Fax: +44 (0)1865 310527; email: [email protected]. Laura El-Katiri, Oxford Institute for Energy Studies, Tel: +44(0)1865 889134 Fax: +44 (0)1865 310527; email: [email protected]. The authors would like to thank Chris Allsopp, Robert Mabro, Pasquale Scaramozzino, Suleiman J. Al-Herbish, Majid Al Moneef, Faris Hasan, Geoffrey Skipper, R. Bencherif, and Abdullah Ibrahim El-Kuwaiz for their useful comments. All remaining errors are our own. i The contents of this paper are the authors’ sole responsibility. They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its members. Copyright © 2011 Oxford Institute for Energy Studies (Registered Charity, No. 286084) This publication may be reproduced in part for educational or non-profit purposes without special permission from the copyright holder, provided acknowledgment of the source is made. No use of this publication may be made for resale or for any other commercial purpose whatsoever without prior permission in writing from the Oxford Institute for Energy Studies. ISBN 978-1-907555-35-0 ii This report has been prepared for the Arab Energy Club (Beirut, Lebanon) as part of its call for papers on the topic of ‘Energy Poverty in the Arab World’. The contents of this paper are the authors’ sole responsibility. They do not necessarily represent the views of the Oxford Institute for Energy Studies or the Arab Energy Club or any of its members. Dr Bassam Fattouh would like to thank the Arab Energy Club and the OPEC Fund for International Development (OFID) in Vienna for financial support (Special Grant from OFID to the Arab Energy Club for the Research of ‘Best Methods to Fight Energy Poverty as outlined in The Third Summit of Heads of State and Government of OPEC Member Countries, Riyadh Declaration, Riyadh, Kingdom of Saudi Arabia, 17–18 November 2007’). iii Contents Executive Summary ................................................................................................................. v Introduction .............................................................................................................................. 4 PART 1: Theoretical Background .......................................................................................... 8 1. Energy and Development .................................................................................................... 8 1.1. The Links between Energy and Development ................................................................. 9 1.2. Climbing the Energy Ladder ......................................................................................... 15 1.3. Subsidies and Energy Poverty ....................................................................................... 16 PART 2: Energy Poverty in Yemen ..................................................................................... 21 2. Poverty and the Yemeni Economy ................................................................................... 21 2.1. Extent and Quality of Poverty ....................................................................................... 22 2.2. Reasons for Poverty Levels in Yemen ........................................................................... 24 2.3. Yemen in 2011 ............................................................................................................... 27 3. Yemen’s Energy Ladder.................................................................................................... 30 3.1. Traditional Fuels/Biomass ............................................................................................ 31 3.2. Modern Fuels ................................................................................................................ 33 3.3. Electricity ...................................................................................................................... 37 4. Interaction between Poverty and Energy Poverty .......................................................... 41 4.1. Energy and Food Security ............................................................................................. 41 4.2. Energy and Education ................................................................................................... 44 4.3. Energy and Health ........................................................................................................ 46 4.4. Energy and the Environment ......................................................................................... 48 4.5. Energy and Access to the Outside World ...................................................................... 51 5. Energy Subsidies in Yemen ............................................................................................... 53 6. Policy Options..................................................................................................................... 60 Appendix ................................................................................................................................. 63 References ............................................................................................................................... 70 iv Tables Table 1: Health Damaging Pollutants per Unit Energy Delivered by Fuel: Ratio of Emissions to those of LPG ..................................................................................................... 14 Table 2: GNI per Capita, Atlas Method (Current US$) in Selected Arab Countries, 2008 .................................................................................................................................................. 21 Table 3: Percentage of households that report use of each fuel ........................................ 30 Table 4: Subsidies Accruing to Income Decile by Fuel ...................................................... 56 Table 5: Access to Electricity by Income Decile .................................................................. 58 Table A1: Selected Socio-Economic Indicators for Yemen and the Arab World, 2008 .. 63 Table A2: Selected Socio-Economic Indicators for Yemen, 1990–2009 ............................ 65 Table A3: Electricity access in 2008 in Selected Arab Countries ...................................... 67 Figures Figure 1: The Percentage of Poor by Governorate in Yemen, 2005/2006 ........................ 23 Figure 2: Sectoral Share in Liquid Fuel Consumption ...................................................... 37 Figure 3: Domestic Price and Price at Yemen Border by Type of Fuel (in YR/litre), 2010 Q2 ............................................................................................................................................ 54 Figure 4: Percentage of Total Government Expenditure by Various Categories ............ 55 Figure A1: Total Petroleum Product Consumption per capita per year (barrels of oil) in 2009.......................................................................................................................................... 68 Figure A2: Electricity consumption/population (kWh per capita) in Selected Arab Countries (2008) ..................................................................................................................... 69 v Executive Summary 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
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