Speaker
Description
Claims for removing fossil fuel subsidies in the Global South are based on climate and equity concerns, but they can be at odds with improving access to LPG as a clean cooking fuel. We examine the case of urban Senegal where LPG usage rates were among the highest in Sub-Saharan Africa in the late 2000s. Using representative data, we show that LPG usage rates declined sharply following the removal of LPG subsidies in 2009. Counterintuitively, the decline was not reversed when world market prices led to a local price decrease. To explore this puzzle, we use detailed household data from a survey we conducted in two waves in 2009 and 2019. We find that households switched back to charcoal after the subsidy removal, yet over time they increasingly use newly promoted energy-efficient charcoal stoves. These stoves make the transition back to LPG less attractive. Our results suggest that the energy transition of the poor is a highly price responsive process. Pricing instruments such as end user subsidies and carbon taxes should be used cautiously and with an eye on the poor.
