Household fuels - economics, health and safety

Philip Lloyd & George TathamEnergy Research Institute &

Independent consultantplloyd@freemail.absa.co.za georget@jaywalk.com

Vision

Everyone should be able to cook and keep warm without threats to their health and well-being

Goal and Objective Our goal is to understand the

economics of the energy needs of rural households, in the light of: The external costsa arising from health

and safety The problems of delivery

Our objective is to help decision-makers develop policies which will minimise the total costs

a) External costs described later

Today’s Situation I

Electricity has reached most urban and semi-urban households

Low-income households use an energy mix in which electricity plays a minor role

In low income homes, the thermal needs – cooking and space heating – are met by fuels with high external costs

Today’s Situation II

The reason we concentrate on the thermal needs is because these are the ones which use most energy

Today’s Situation III

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1000

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4000

MJ delivered

Planned shack, Cape Town

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1000

2000

3000

4000

MJ delivered

Planned shack, Kimberley

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1000

2000

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Planned shack, PWV

Today’s Situation II

The reason we concentrate on the thermal needs is because these are the ones which use most energy

Most households need < 1000MJ/month This is equivalent to < 9kWh every day

But as electricity is often efficient than other energy sources, 3-5 kWh would be enough

Cooking – 100 000’s households

Heating – 100 000’s households

Summarising today

In households which cannot afford or are out of reach electricity, thermal needs are met by: Wood and paraffin Except, in areas close to mines, by coal.

The average low-income house needs ~1000 MJ/month, equivalent to <10kWh

How the fuels compare

We now look at each fuel, and compare the pros and cons of each

The “external” costs largely arise from the cons They are the costs born by society

rather than by the user, and not included in the cost of the fuel

Wood

Primary fuel in KZN, E Cape & Northern P

Low cost Renewable Cheap appliances

Inefficient Emits particulates

(smoke) –respiratory illnesses

Burns Labour cost Deforestation

Paraffin

600 000 t/a Major in KZN, E Cape,

Gauteng, NW, Free State

Significant in W Cape, Northern, Mp’langa

Cheap appliances Energy swops Multipurpose

145 000 children drink, 55 000 sick, 4000 die

46 000 fires, 50 000 burns, 65 000 homes

63% of burns from appliances exploding

Incendiary Use of IP probably

causes severe respiratory problems

Cross-contamination

Paraffin Appliance I

Paraffin Appliance II

Paraffin Appliance III

Paraffin cost chain

c/lIndicative

gross margin

Refiner

20

Distributor

20

Price controlled to stockist level –street price varies up to diesel price

Street

Stockist

50-1,50

Router

10

Paraffin external costs

Poisoning Burns Houses

R500m/a R1170m/a R1300m/a Total ~ R3000m/a

<600 million litres sold to domestic market

External costs > R5/lIf respiratory effects proved, external cost could increase significantly

Coal

Major in Gauteng, KZN, Free State, Mp’langa

Distribution creates jobs

Multipurpose, including refuse incineration(but less than paraffin)

Appliances costly &/or inefficient

Smoke & dirt Ash disposal Respiratory

disease Asphyxiation,

~500/a

Coal appliance

Coal appliance II

Coal distribution

Coal cost chainMine

35

Distributor

35

Street

Dealer

125-250

R/tIndicative

gross margin

Coal external costs Approximately 3 million in close

proximity Asphyxiation by CO ~ 500 deaths/a Respiratory effects probably shorten

lives of 35 000 by 15 years Total costs ~ R3450m/a ~ 1 million tons sold annually External cost R3450/t

Gas

Small player, used particularly for cooking, in most provinces

LPG main thermal fuel in other developing countries

Very very safe Low emissions

Costly – market imperfections!

Relatively costly appliances

Large investment in cylinders + deposit

Does not allow swops

Gas cost chainRefinery

65

Distributor

35

Dealer

45

Street

Stockist

90

c/lIndicative

gross margin

Gas external costs Implication in fires and burns ~ 2%

of that of paraffin No respiratory or poisoning effects Total external cost <R60 million/a 96 million litres (62000t) LPG to low

income market (2000) External cost of <R0.70/litre

Dung & other biomass

Widespread & significant in most provinces, particularly for heating

Cheap

Some particulates

Summary of costs

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Paraffin Coal Gas

Cents

/M

J ToExternalToStreet price

Available Options I

Make 5kW cheap electricity available for an hour or so each day Would load Eskom demand excessively Gas-fired stations could resolve this Requires yet further extensions to grid Possible cost ~ R15bn plus R500

million/a for 5 years

Available Options II

Enforce rigorous standards for safe paraffin appliances, with subsidy to assist purchase Difficult to police change Would have little impact on e.g.

poisoning Probable costs R2bn capital, R350m/a

for 5 years

Available Options III

Reduce external costs of coal by enforcing use of LSF Under active study by DME Only applicable to <20% of population Costs ~R250 million capex, R50

million/a for 5 years

Available Options IV Use international LPG experience

Increase tax on paraffin Control price of LPG, after review of LPG

pricing structure Facilitate manufacture of safe cheap

LPG appliances & subsidise purchase Grow distribution via BEE Some capital may be needed to capture

existing excess LPG Total costs of <R1bn and ~R200m/a

for 5 years

Available Options V Fix specifications for subsidised

housing Improve thermal efficiency

Ceilings Face north

Provide chimneys In both paraffin & coal heated houses CO levels

of >1000 ppm have been measured – dung/biomass heating probably has same effect

Cost < 5% increase in house cost Reduces lifetime cost dramatically

Recommendations

The electricity option is probably ruled out for several years because of lack of NG and probable NG pricing

The paraffin appliance option seems to costly, & will not stop child deaths, etc

LSF work should continue to be supported

Recommendations continued

Build on international experience of LPG in developing economies There are exciting possibilities if this

option is supported. They include: Creating lots of jobs in the distribution chain Enabling growth of many SMEE’s

Review building codes for subsidised housing

Thank you for your attention!