Strategies for Affordable and Fair Clean Energy Transitions

Policies promoting affordability

Pursuing fair outcomes for households

  • Policies influence how the costs and benefits of clean energy transitions are distributed. Good policy design considers the distributional aspects and wider social impacts of a policy and ensures that everyone has access to affordable clean energy technologies. This chapter explores clean energy policies that attempt to do this.
  • Appliance ownership growth underlines the need for efforts to promote efficient and affordable appliances. Policies in Senegal and Ghana show how financial support can make best-in-class models competitive with less efficient models, while Mexico’s policies on minimum energy performance standards show how such standards can drive up efficiency without damaging affordability.
  • Many homes require retrofits to make them energy-efficient, but lower-income households can often not afford the upfront costs. Examples in Ireland, France and the United Kingdom show how policies can be designed to provide targeted support to vulnerable households, resulting in wider social benefits.
  • Electric vehicles are central to clean energy transitions, but their upfront costs can make them unaffordable for lower-income households. Policies in India and China show how a focus on the electrification of public transport and on incentives for electric two‑ and three-wheelers can promote affordable clean transport for all.
  • Energy bills lie at the heart of concerns around affordability, and energy market design inevitably influences the structure and cost of bills. Experiences in Indonesia, Nigeria and Egypt show the challenges of reforming fossil fuel subsidies while promoting affordable clean energy consumption.
  • Carbon pricing will disproportionately affect poorer households if they do not gain access to clean energy technologies as quickly as others, and there is a strong case for recycling revenues from these instruments to mitigate the cost impacts for these households in particular. The European Union and California provide examples of how this can be done.
  • Household renewable energy production reduces the need to buy electricity from the grid and usually pays for itself quickly, but upfront investment costs and unreliable grid connections make participation difficult for low-income households in rural areas in particular. Policies in Bangladesh, China and Nigeria show how good policy design can roll out affordable solar systems to increase access to electricity.
  • The case studies in this chapter show the power of policy design. The social impacts of policies should be identified and taken into account by policy makers. Only then can clean energy technologies be affordable and accessible for all.
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