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The great energy divide: the inequality of consumption

The busy streets of New Delhi The busy streets of New Delhi
11 Sep
The amount of energy used by the wealthy minority dwarfs that of the poorer majority – but can we boost the energy available to the poor without sacrificing climate targets?

The bustling streets of New Delhi provide a snapshot of global inequality. Lamborghinis may line the driveways of luxury shopping malls, but only a few turns away, children play shoeless in the mud of rudimentary settlements. Yannick Oswald, an energy researcher at the University of Leeds, was struck by this inequality when he visited the city in 2016: ‘From then on, I couldn’t stop thinking about the insane gulf between the vast resources and energy used up in just one day by the Lamborghini owner, compared to how little is provided to the poor.’ 

In 2017, 82 per cent of all wealth created fell into the hands of the top one per cent of earners. At the same time, around one billion people don’t have access to electricity. Ending poverty necessitates that the latter figure comes down, but a key challenge is to do so without compromising environmental targets. A 2017 study published in Nature and led by Klaus Hubacek at the University of Maryland, demonstrated that increasing the income of those in extreme poverty to above $1.90 purchasing power parity a day – a measurement that uses the prices of goods in diff erent countries to compare absolute purchasing power, also known as ‘international dollars’ – would not jeopardise climate targets. According to the World Bank’s international poverty line, $1.90 is the threshold for extreme poverty. However, raising this to a still-modest $2.97 a day would have long-term consequences for achieving emissions targets. 

‘To combat climate change, we need to reduce energy and CO2 emissions worldwide. Equally, we have a vast amount of people who do not have basic energy for living,’ says Oswald. ‘We have to somehow get the poor out of this energy poverty and reduce the energy consumption of the wealthy.’ 

New Delhi streetsThe bustling streets of New Delhi can often be a snapshot of energy inequality. While many inhabitants don't have access to electricity, some drive energy-intensive sports vehicles

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Understanding people’s everyday energy usage is a start to solving this problem. Oswald and his team have created a model that incorporates data from the International Energy Agency and the World Bank in order to visualise how energy was utilised in 2011 and how it varied according to income. The dataset is expansive: 78 per cent of the global population, 56 per cent of global GDP and 64 per cent of fi nal energy in 2011 are represented. ‘We factored in both direct and indirect energy: “direct” is that used at home in heating and electricity, for example; and “indirect” is embodied in the goods and services that we use, as well as their supply chains,’ says Oswald. 

The findings show that the use of energy-intensive products and services by the highest earners propagates the energy divide. In 2011, the top ten per cent of global earners consumed 39 per cent of final energy. This was nearly equivalent to the total consumption by the bottom 80 per cent of earners. What’s more, the lowest ten per cent consumed almost 20 times less than the top ten per cent.

‘The lowest income groups use mainly direct energy to prepare food and satisfy basic needs,’ says Oswald. ‘As you go up the income scale, you see people starting to spend more on their homes, on mobility, on vehicles, holidays and luxury items – indirect, energy-intensive goods and services.’ 

The difference in transport-related energy was particularly stark. The top ten per cent of earners used 187 times more vehicle-fuel-related energy than the bottom ten per cent. This equates to around 45 per cent of the total energy for land transport and around 75 per cent for air transport. 

Consumption map resizedDark circles represent indirect energy consumption, such as that used in product supply chains. Light circles represent direct energy consumption. Energy intensive goods and services make up a higher proportion of energy expenditure of high-income households. Source: Oswald Y, et al. Nature Energy 2020

Oswald has some suggestions for bringing down the energy use of the most wealthy. ‘It would be nonsense to implement a blanket energy tax for all. However, some energy expenditure is non-essential: no-one with a high income is going to die by not buying a Land Rover, or not going on holiday four times a year. So we could start to implement measures such as frequent-flyer levies and energy taxes on high-emitting, non-essential goods and services.’ 

Measures such as these seek to resolve what is a double challenge: altering energy use to protect the climate and ecosystems, while also ensuring a decent standard of living for all. 

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