The impact of LPG consumption on cooking energy efficiency: Evidence from rural Indian household panel data

Abstract

The Indian government promoted the adoption of LPG by millions of poor households through targeted Pradhan Mantri Ujjwala Yojana connection subsidies. However, there is no empirical study on the impact of LPG adoption and usage on cooking energy efficiency. It is important to analyze the causal impact of LPG usage on cooking energy efficiency to help estimate the energy saving resulting from fuel-switching and understand the implications for the improvement of the environment, health, and socioeconomic outcomes. This paper leverages panel data on rural household energy use from the Access to Clean Cooking Energy and Electricity – Survey of States survey to evaluate the impact of the share of LPG consumption on overall cooking energy efficiency in 5,590 [n = 1,538 in 2015 and n = 4,052 in 2018] LPG adopters. To account for the potential endogeneity posed by the share of LPG consumption on our dependent variable, we used the village-level fraction of households who report the use of LPG as the main source of cooking fuel as an instrumental variable. We find a statistically significant impact of LPG consumption share on improved household cooking energy efficiency. A 10 % increase in the share of LPG reduces the total useful energy consumed by 9 % and the final energy consumed by 23 %. The extrapolated result indicates that the shift by all partial LPG user households in rural India in 2018 to exclusive (100 %) use of LPG will save about 81 million tonnes of firewood or 3.34 % of India’s primary energy consumption. A pro-poor subsidies for LPG refill and other policy measures that encourage households to shift to more exclusive use of LPG can reduce overall household energy consumption which is expected in turn to help achieve the environmental and health benefits of improved energy efficiency.