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Energy crisis would add 141 million people to poverty figures

Rising energy prices caused by the war between Russia and Ukraine could plunge an additional 141 million people worldwide into poverty

By Ground report 17 Feb 2023

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Rising energy prices caused by the war between Russia and Ukraine could plunge an additional 141 million people worldwide into extreme poverty, according to a study in the journal Nature Energy. The rise in energy costs has skyrocketed the costs of goods and services, and the price of heating, cooling and mobility has grown notably and impacted homes in 116 countries.

Energy crisis

An international group of scientists, including experts from the Universities of Birmingham, Groningen and Maryland, as well as the Chinese Academy of Sciences, have modelled the impact of rising prices on homes in 116 countries.

The researchers call for targeted energy assistance to help vulnerable households during the current crisis.

Thus, the work foresees that the total energy cost of households will increase between 62.6% and 112.9%, contributing to an increase from 2.7% to 4.8% of household spending and pressures on the cost of living that could push between 78 and 141 million people into extreme poverty.

Yuli Shan, from the University of Birmingham, explains that high energy prices affect the domestic economy in two ways.

Rising energy prices will affect households

Rises in fuel prices directly increase household energy bills, while the energy inputs necessary to produce goods and services also raise the prices of these products and, especially, those of food, which indirectly affects to homes.

"Due to the unequal distribution of income, rising energy prices will affect households in very different ways. The unaffordable costs of energy and other necessities will push vulnerable populations into energy poverty and even extreme poverty," stresses the researcher.

"This unprecedented global energy crisis reminds us that an energy system heavily dependent on fossil fuels perpetuates risks to energy security, as well as accelerating climate change," it says in a statement from the University of Birmingham.

Higher energy cost burden rates in low-income countries

The researchers found significant variations across countries and, within countries, determined by household consumption patterns and reliance on fossil fuels in global supply chains.

They found that wealthier households tend to have higher energy cost burden rates in low-income countries, while poorer households tend to have higher rates in high-income countries.

Households in sub-Saharan African countries are the most affected in terms of the total burden rate of energy costs.

Globally, wealthier groups tend to have higher energy costs for high-value-added goods and services, while poorer households tend to spend more on daily needs such as food and direct energy.