1.1 Household Energy Consumption in the Asian and Pacific Region: Analysis of Development Trends and Policy Implications
by ESCAP secretariat

1.1.1 Overview of household energy consumption trends in the Asian and Pacific region

1.1.1.1 General energy consumption patterns in the Asian and Pacific region

During the past few decades, member countries of the Economic and Social Commission for Asia and the Pacific (ESCAP) have experienced many changes in their energy consumption patterns both in quantitative and qualitative terms. This can be explained by two factors. The first factor is the natural increase based on population growth and demographic changes such as the changes in age groups and household size. Another factor is the increase of economic activity and development. 

Until the late 1980s, population growth and demographic changes accounted for most energy consumption growth in this region. The population of the ESCAP region grew by about 16.23 per cent from 1982 to 1990 and by about 13 per cent from 1991 to 1999. Since energy consumption from population growth has been offset, to some extent, by switching to more efficient fuels, measured from the calorific values in tonnes of oil equivalent (TOE), the growth rate of energy consumption was rather moderate.

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In the 1990s, in addition to population growth, economic expansion led to faster growth in energy consumption. During 1990-1997, energy consumption in developing countries of the Asian and Pacific region increased by 5.6 per cent annually compared to a world average of 1.1 per cent. Economic development in the ESCAP region during the 1990s resulted in a more energy-consuming lifestyle. Migration and rapid urban growth lead to rapid growth in energy consumption. Energy grids were expanded, per capita income increased, and more user-friendly household appliances were distributed rapidly. 

Energy is a key element in economic development and energy consumption is expected to continue to increase in the next few decades. According to research by the International Energy Agency (IEA), China, South Asia, East Asia, Latin America, Africa and West Asia will account for 68 per cent of the increase in world energy demand between 1997 and 2020. Member countries of the Organization for Economic Cooperation and Development (OECD) currently use 54 per cent of the world’s energy. This is expected to decline to 44 per cent by 2020 while that of developing countries may rise to 45 per cent from its current 34 per cent.

Based on the two factors just mentioned, it is estimated that total energy demand in developing economies of the Asian and Pacific region will grow by 3.7 per cent annually from 1997 to 2020. The population of the region is expected to reach about 4,727 million in 2025. Substantial economic growth is also expected. The ESCAP region shows every evidence of household energy consumption increasing.

Figure 1.1.1 Projected increases in energy demand by region, 1997-2020


1.1.1.2 Household energy consumption in the Asian and Pacific region

In developing countries, energy consumption per capita is much lower than in industrialized countries. In the ESCAP region, the average per capita energy consumption was only 604 kilogrammes of oil equivalent (kgoe) and that of developing countries 333 kgoe, compared to the world average of 1,692 kgoe. However, growing population and economic development would result in substantial expansion in total energy consumption, including household consumption. 

Household energy consumption can be defined as the energy consumed in homes to meet the needs of the householders themselves. Thus, for example, cooking food at home for the household is included, while cooking food for sale is not, and nor is food processing and preparation undertaken before the household purchases the food. The final energy consumption of households is often called residential energy consumption and it covers the energy consumed in household dwellings. 

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The pattern of household energy consumption represents the stage of welfare as well as the stage of economic development. As the economy develops, more and cleaner energy is consumed. It is natural for people to pursue a better life, which often means increased mobility, proper heating and cooling, and more equipment. 

Figure 1.1.2 shows the residential sector’s share of total energy consumption and the ranking reflects the relative importance of that sector in total national energy consumption. In several developing countries of the ESCAP region, including Armenia, India, Indonesia, Nepal, Pakistan, Sri Lanka and Viet Nam, residential energy consumption accounts for some 50 per cent of total energy use. It should be noted that Figure 1.1.2 does not include non-commercial energy consumption.

Figure 1.1.2 Final energy consumption by sector in the ESCAP region in 1998


Household energy consumption is expected to increase throughout the Asian and Pacific region together with economic growth and rising per capita income. The Asia Pacific Energy Research Centre projects that energy consumption of the residential and commercial sectors is to grow by some 40 per cent from 2002 to 2010, reaching 1,082 million tonnes of oil equivalent (Mtoe) per annum in 2010. South-east Asian economies are expected to show the strongest growth of 4.1 per cent annually. 

The projected increases in household energy consumption are expected to result from changes in lifestyles. It is important to analyze household energy consumption patterns in order to formulate policies for promotion of sustainable energy consumption.


1.1.1.3 Consumption of non-commercial energy in the ESCAP region

In many developing countries of the region, households still rely largely on non-commercial energy. They rely heavily on biofuels, such as woodfuel, biomass (crop and livestock residues) and charcoal, which are generally not included in official energy data. According to the Food and Agricultural Organization of the United Nations (FAO) Regional Wood Energy Development Programme, woodfuel contributes more than 90 per cent of the energy requirements of households in some areas.

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In some Asian developing countries, many households use mainly biofuel for cooking. Rural households rely more on biofuels than urban households. In Bangladesh, households account for 78 per cent of total biomass consumption in the country. Agriculture residues and animal dung contribute significantly to rural household energy consumption in India and Pakistan. The contribution of fuelwood to total final energy consumption varies widely (1.5 per cent to 85.3 per cent) but its share in household energy consumption has remained above 50 per cent in many countries.

Figure 1.1.3 shows that, in general, the shares of biofuels in total energy consumption have been decreasing throughout the region. However, this does not mean that biofuel consumption has decreased. Total energy consumption grew faster than biowood consumption.

Figure 1.1.3 Biofuel share of total energy consumption in the ESCAP region

There are many ways to improve and increase efficiency of biofuel consumption of rural households in developing countries. However, the further analysis in this publication focuses only on commercial energy use.


1.1.1.4 Electricity consumption in the ESCAP region

The choice of biofuel is often based on lack of accessibility and insufficient income to use commercial energy. In many countries, urbanization and increased family income has resulted in a shift from biofuels to the other forms of energy, known as “stepping up the fuel ladder”. There is an indication in a number of developed economies that with higher incomes the residential fuel mix is shifting away from biofuel to oil and coal and finally to electricity and gas. 

Electricity is the most convenient form of household energy consumption as it makes the use of electric appliances possible. During the past few decades, electricity consumption has grown faster than any other fuel. And the growth rate of per capita household electricity consumption in this region has outnumbered the growth rate of per capita income. During the period 1988-1998, the average annual growth rate of electricity consumption in Viet Nam was 13.4 per cent. In Indonesia and in the Republic of Korea, the growth rates were 12.8 and 10.9 per cent respectively. Even though electricity consumption China grew slightly more than 7 per cent, China will be the largest electricity consumer in the Asia and Pacific region by 2020. Residential electricity consumption in China has tended to grow faster than national electricity consumption. 

Figure 1.1.4 Electricity consumption in 1990-2020

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The projected increases of energy consumption for the different regions shown in Figure 1.1.4 show the need for and are based on the assumption of rapidly growing energy infrastructures. More than 220 million people live without electricity in this region. Table 1.1.1 indicates the countries in which the electricity infrastructure expansion and development needs are greatest.

Table 1.1.1 Number of population in selected countries without electricity in 2000


1.1.2 Household energy consumption survey of selected countries

The primary factors which influence total energy consumption are population growth and levels of household incomes. Significant changes have recently occurred as a result of changes in technology, income levels and lifestyles. This section will discuss the main factors influencing household energy consumption growth, particularly per capita income growth, fuel shifts, demographic changes and consumption pattern by income. 

Most data used in the subsequent analysis is based on household energy consumption surveys conducted by individual countries or international organizations. In the Asian and Pacific region, it is still difficult to find internationally comparable data, particularly in regard to energy consumption in the household sector. 


1.1.2.1 Fuel switching in selected countries

Republic of Korea

With increases in GNP per capita, changes in energy consumption occur. Energy consumption grows as income increases. It also switches from traditional to conventional energy sources (Phase I) and from fossil fuels to more convenient energy, at least for a part of the population (Phase II). 

The development of energy consumption in the Republic of Korea is typical of fuel switch patterns. Increasing household energy consumption has grown together with per capita GNP as shown by Figure 1.1.5. There was a substantial decrease in total household energy consumption between 1996 and 1998. This reduction resulted from the economic crisis which occurred during that period. 

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According to results of a 1999 energy survey, household energy consumption in Republic of Korea accounted for 14.2 per cent of total energy consumption. With rapid economic development, household energy consumption has also increased from the early 1980s. Coal, which accounted for the largest share in 1986, only accounted for 1.8 per cent (329,000 toe) of household energy consumption in 1998. Other energy sources such as biofuels and low quality coal, accounted for 18.5 per cent of residential energy consumption but became negligible in 1998 (less than 0.1 per cent). 

Figure 1.1.5 Household energy consumption and gross domestic product (GDP) in the Republic of Korea


The changes in energy consumption patterns can be more easily understood if one looks closely at fuel switch by end-use. The cooking energy source has gradually changed since 1983. With rapid urbanization, city gas grids have been expanded rapidly and gas is now the dominant cooking fuel. Republic of Korea has a long winter and heating energy is a big chunk of total household energy consumption. As shown in Table 1.1.2, a comprehensive fuel switch has occurred in household energy consumption there. 

Table 1.1.2 Changes in domestic cooking and heating fuel in the Republic of Korea


China

A trend in household energy consumption similar to that of Republic of Korea can be observed in China. There, household energy consumption is dominated by coal. However, the use of coal in households has declined significantly during the past 10 years.

Due to rapid dissemination of electrical home appliances, electricity use has increased more than fourfold during the period 1980-1998. Electricity currently accounts for 37 per cent of household energy consumption in China. However, coal remains the main fuel used to generate electricity so households still indirectly consume a large amount of coal. The use of liquefied petroleum gas (LPG), town gas, and natural gas, has risen about 14.5 per cent. 

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Total household energy consumption showed a decline in 1997-1998. There is so far no consensus among researchers in the explanation of this phenomenon. One possible explanation is that energy efficiency policies are having an impact. Some other explanations point to changes of statistical coverage resulting from methodology changes, increasing privatization of economic entities and similar trends. It should also again be noted that non-commercial energy consumption of households was not included in the statistics. Especially in rural areas, some sources estimate non-commercial energy use still accounts for about 80 per cent of total.

Figure 1.1.6 Household energy consumption in China


Thailand

With rapid increases in per capita GDP, Thai households are spending more money on commercial energy. During recent years energy expenditures have increased annually at more than 10 per cent. Charcoal and wood energy use is declining.

There is not yet a distinct trend in changes in the energy consumption patterns of households in Thailand. Petroleum products are still the major energy source with 56 per cent share. However, in recent years electricity consumption has had an annual growth rate of 25.3 per cent.

Thailand’s economy was seriously affected by economic crisis in 1997-1998. But in contrast to other countries in the region, its energy consumption growth rate has not been affected.

Figure 1.1.7 Average monthly energy consumption expenditures per household in Thailand


Philippines

Household change their choice of energy sources for different reasons, such as energy prices, income, availability and convenience. A survey of 857,000 households in the Philippines found that the main reasons for switching cooking fuels were availability and convenience. Household income and fuel prices are also listed as important reasons for switching fuel. Households in both rural and urban areas choose “convenience” as the first reason for switching.

Figure 1.1.8 Reasons for switching fuel in urban and rural areas of the Philippines, 1995

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1.1.3 Factors determining energy consumption and fuel choice

1.1.3.1 Demographic change and urbanization

Small households in Republic of Korea use more energy per person than large families. A person in a 2-member family consumes 4 Mtoe annually, whereas a person in a household with more than six members consumes only 1.3 Mtoe per year. Even though the nuclear family uses less total energy, large families synergize their energy use. The share of electricity in a small family is higher than in large families. All households prefer convenient energy. 

Table 1.1.3 Energy consumption by household size in the Republic of Korea (1998)


In many countries it is becoming more popular to live in a nuclear family arrangement rather than in the traditional extended family. This trend appeared in the Population and Housing Census of Thailand.

The number of private Thai households was about 12.2 million in 1990 and 15.2 million in 2000. The average annual growth rate was about 2.4 per cent, much higher than the average annual population growth rate of 1.1 percent over the same period. The increase in the number of households implies a smaller household size. 

Nuclear families tend to live in urban areas. This may be one factor that explains the higher energy consumption in urban areas, apart from easy access to the commercial energy grid and higher income. 

In China in 1996, the average urban household had 70 per cent higher income than a rural household. During 1986-1996, the family size became smaller. Average income increased about 39 per cent in urban areas and 31 per cent in rural areas. Household energy consumption increased in both urban and rural areas by 21 per cent and 48 per cent respectively. 

Table 1.1.4 Trends in household energy consumption in China, 1986-1996

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In the Philippines, recent energy consumption trends show similar features. The energy survey of the Philippines distinguishes energy consumption by region which enables analysis of the different energy consumption patterns of urban and rural areas.

Among the four conventional fuels (LPG, gas, diesel and kerosene) most households used LPG and kerosene in 1995. The household consumption amounted to 503,000 tonnes of LPG, and 776 cubic metres of kerosene. When compared with 1989 figures, these show increases of 56.7 per cent for LPG and 56.4 per cent for kerosene. Consumption of woodfuel dropped by 20.5 per cent over the same period. 

Differences in energy consumption between urban and rural households are more distinct with electricity. In the Philippines, electricity consumption increased by 18.8 per cent nationwide during 1989-1995. Electricity consumption by households in the National Capital Region and other urban areas increased by an average of 27.8 per cent whereas consumption of electricity in rural areas continued to stagnate.

Asia’s urban population is expected to increase 37-53 per cent by the year 2030. Trends towards smaller families and continued urbanization will influence future household energy consumption needs in member countries of the ESCAP region. 

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1.1.4 Income levels, occupational groups and household energy consumption patterns

Household energy consumption increases with GDP per capita. Energy consumption of individual households also increases with disposable income. Households with better incomes consume greater quantities and more convenient forms of energy. In Republic of Korea, coal is no longer used by upper income groups which rely entirely on gas and electricity for their energy needs.

Table 1.1.5 Energy consumption and income levels in Republic of Korea (1998)


In India, households still predominately rely on non-commercial fuels. Firewood, crop residues and dung cake provide a high portion of household energy consumption.

On the average, biomass fuels supply 94.9 per cent of rural household and 41.5 per cent of urban household energy. Urban consumers with higher incomes consume more LPG. Low-income Indian households consume little electricity. 

Table 1.1.6 Household energy consumption in India, 1995


Professional, technical and administrative employees in Thailand spend as much as 2.5 times more on energy than other professional groups. Incomes and expenditures of farm workers and general workers is the lowest of all groups. Within the same group, there are significant differences between people living in metropolitan Bangkok and those in rural areas. 

Table 1.1.7 Average monthly household fuel consumption expenditures by occupational groups in Thailand, 1998


Urban residents and social groups with higher incomes consume more energy than other groups. Urbanization brings with it both greater accessibility to modern fuels and higher household income levels. Urban areas have a better infrastructure to supply modern fuels. The trend towards consumption of more convenient fuel will continue and accelerate together with the process of urbanization.

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1.1.5 Energy efficiency potentials in the household sector

Commercial energy consumption of households in the Asia and Pacific region can be expected to grow continuously and rapidly for the foreseeable future. In many of the countries, underprivileged social groups have inadequate or no access to modern and affordable energy -- a precondition for productivity as well as improvement in urban and rural lifestyles. The projected growth in energy consumption will require large capital investments to modernize and expand energy infrastructure, particularly in the power generation and distribution sectors.

Projected increases in energy consumption will be associated with emissions harming the local, regional and global environment. The pursuit and achievement of a “sustainable energy future for all” will require the conception and implementation of effective measures to enhance efficient energy use in all sectors of society, including the residential sector.

Current levels of per capita commercial energy consumption are still comparatively low in most developing countries. However, the projected rapid expansion of energy consumption calls for pro-active energy efficiency promotion policies, including demand side management (DSM) programmes. In addition to the energy planning and development authorities, utilities have an important role in DSM implementation. DSM programmes recognize the increasing importance of information and awareness creation campaigns aimed at creating preference among consumers for more energy efficient products and consumption patterns.

Many Asian countries have fast growing markets for electric appliances. Electricity consumption is projected to continue to grow rapidly. In China and several other countries, the distribution of electrical appliances is growing rapidly.

Figure 1.1.9 Number of electrical appliances in China


In many countries and productive sectors energy efficiency gains are being realized together with technical progress and modernization. Recent efficiency gains achieved by compact fluorescent lamps (CFL) are a good example of continuing improvement in electrical appliances. CFLs consume 84 per cent less electricity than incandescent light bulbs. Countries can save energy through programmes that replace incandescent lamps by CFLs. The energy efficiency of many other electrical appliances is also being improved.

Figure 1.1.10 Transition of television energy efficiency in Japan

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As shown in Figure 1.1.10, over the past decade, the energy efficiency of televisions manufactured in Japan has continuously improved. And the power consumption of refrigerators in Japan has also decreased from 0.31 kWh/month in 1979 to 0.14 kWh/month in 1997 (per litre of refrigerator volume). The standby energy consumption of video tape recorders was reduced from 7.5 W in 1991 to 3.6 W in 1998. 

The promotion of energy efficiency improvements is the core objective of DSM. Households are the final consumers of electricity and DSM programmes can realize significant economic gains if consumers can be persuaded to prefer energy efficient products and energy-conscious consumption options.

Table 1.1.8 DSM potential by efficient technology in the Republic of Korea


Today, the OECD economies use about 45 per cent less energy to generate one unit of GDP than in 1973. Through the adoption of new and energy efficient technologies and policies, developing countries have the option to also reduce their energy use. In China and several other countries the assessed potentials for energy efficiency gains are significant. 

Table 1.1.9 Projected electricity consumption trends and energy saving potentials in China


1.1.6 Outlook and policy options

Effective promotion of energy efficiency requires a comprehensive and systematic approach, including:
- a regulatory framework which provides adequate incentives for
   sustainable production and consumption of energy;
- balanced fiscal policy measures aimed at internalizing costs of
   environmental impacts into energy pricing;
- reduction of indirect subsidies and their gradual substitution with direct
   subsidization of under privileged urban or rural target groups;
- introduction of incentives for investments into energy efficiency
   projects, and
- systematic advocacy for sustainable products and consumption patterns
   among consumer groups

Earlier ESCAP publications have discussed available policy options to improve efficiency in energy utilization in the various sectors of the economy, in particular in energy supplies and in large-scale, energy-intensive manufacturing processes. With regards to promotion of efficiency in commercial energy use in the household sector, this publication reviews in particular the options for action on the part of consumer organizations.

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