Causes of energy poverty in a cold and resource-rich country: evidence from Kazakhstan

Abstract

ABSTRACTKazakhstan is an upper-middle-income country and one of the coldest countries in the world with rich energy resources and energy prices considerably lower than in developed countries. This paper presents the first comprehensive overview of household fuel use in Kazakhstan and assesses the causes and extent of energy poverty using the Households Living Conditions Survey dataset of 12,000 households. The results show that there is an overwhelming reliance on coal in Kazakhstan: 40% of all surveyed households use coal for heating, cooking and other needs. In general, liquefied petroleum gas is mainly used for cooking, coal and firewood for heating, while electricity is rarely used for heating. Energy poverty was less prevalent in oil and gas rich regions, due to low gas prices and higher income levels in those regions, while households located in the North Kazakhstan, Central and East Kazakhstan mainly suffer from lack of cleaner fuel options, income poverty, longer and colder winters and consequently energy affordability. Despite low energy prices in Kazakhstan, the results demonstrate that 28% of surveyed households spend more than 10% of their income on energy. Gas and district heating infrastructure coverage and income inequality across its regions contributed the most to energy poverty in Kazakhstan. Energy prices are regulated and indirectly subsidised. Removing energy subsidies alone may worsen energy affordability of households. Offering direct subsidies to cover part of the energy expenditures may not fully solve the problem, but subsidies, interventions for efficient technologies and fuels, dwelling energy-efficiency improvements are necessary.