High LPG prices scorching air pollution battle

The continuous increase in the prices of LPG cylinders has been piercing the budgets of many households for more than a year now. The LPG refill price has gone up by more than 50% to Rs 900 per cylinder in November this year, as against around Rs 600 in the last one year. With no refill subsidy in place since May 2020, there is real concern about many households now slipping back by using solid fuels for cooking, pollution such as firewood and dung cakes.

Beginning

According to the Global Burden of Disease Study 2019, the use of solid fuels for cooking is a major contributor to air pollution and related premature deaths in India, estimated to exceed around 600,000 every year. To tackle this issue, the Indian government has taken several measures to improve access to clean cooking energy. For example, under the Pradhan Mantri Ujjwala Yojana scheme, the government distributed over 80 million subsidized LPG connections. But how many homes have we managed to remove from biomass? What else do we need to do as a country to take the needle further?

Shaping India’s LPG Revolution. Good news first. According to India Residential Energy Survey (IRES) 2020, conducted by Council on Energy, Environment and Water (CEEW) and Initiative for Sustainable Energy Policy, LPG is now replacing biomass as the most common cooking fuel in India. About 85% of Indian households have an LPG connection and 71% use it as their primary cooking fuel, compared to only 30% a decade ago. This reversal of trends can be attributed to the success of Ujjwala, consumption linked subsidies and gradual strengthening of LPG distributors. Needless to say, this must have significantly affected the sector’s contribution to air pollution.

However, the battle is only half won. About 30% of Indian households mainly depend on biomass as their primary cooking fuel due to the high prices of LPG. LPG stack with another 24% biomass. The practice of biomass utilization is mainly concentrated in rural areas, especially among states such as Bihar, Jharkhand, Chhattisgarh, Madhya Pradesh, Odisha and West Bengal. Urban slums are also important hotspots where the use of biomass for cooking is widely practiced. The easy availability of free biomass and the lack of home delivery of LPG refills further undermines the efficacy of LPG as a reliable and economical proposition.

restore subsidy

To keep up with the country’s momentum on clean cooking energy access and thus, clean air for all, we propose three key steps.

First, restore the subsidy on LPG refills for low-income households. At current refill prices, an average Indian household would have to spend around 10% of their monthly expenditure on LPG to meet all their cooking energy needs.

According to a CEEW study, this is just twice the actual share of the reported expenditure on cooking energy (as of March 2020). In fact, nearly half of all Indian households will need to at least double their cooking energy expenditure to switch completely to LPG at current prices. Given the loss of income and livelihoods during the novel coronavirus pandemic, households’ ability to afford LPG on a regular basis has been further impacted. Thus, reintroducing the subsidy will be crucial to support the use of LPG in many households. Our estimates suggest that an effective cost of ₹450 per LPG refill could ensure that the average share of real household expenditure on cooking energy matches pre-pandemic levels. The government may keep this in mind as it considers reintroducing LPG subsidy.

The government may also explore diverse approaches to identify beneficiaries. This may include limiting subsidy provision to seven to eight LPG refills annually and using robust indicators to exclude affluent households. For example, reducing the income-based exclusion limit for LPG subsidy from ₹10 lakh a year to ₹2,50,000 a year or significantly reducing the number of eligible beneficiaries in households excluding a non-commercial four wheeler owner can do. At least the subsidy should be reintroduced for the households having LPG connections given under the Ujjwala scheme.

Availability and Biomass

Second, promoting timely availability of LPG to all consumers. Only half of rural LPG users get home delivery of LPG refills, while the rest have to travel around five kilometers to buy a cylinder. The loopholes in doorstep delivery of LPG cylinders are also present in urban areas, especially in slum areas. This is a major factor behind the use of biomass in urban slum households. With a large number of Ujjwala connections and slum population, there is a need to strengthen the LPG supply chain and implement timely service delivery, especially in the US. This should be complemented by higher incentives for rural distributors, who otherwise have to meet low but distributed demand at the same commission. Looping in SHGs can also help aggregate demand and generate employment in remote areas.

Third, creating a new market for locally available biomass. The government needs to pilot initiatives that focus on promoting the use of locally available biomass in decentralized processing units to manufacture briquettes and pellets for industrial and commercial establishments. For example, the National Thermal Power Corporation recently invited applications for the supply of biomass pellets to fire its power stations. The government may encourage entrepreneurs to participate in such activities. Similarly, households are encouraged to supply locally available biomass (including crop stubble or manure) to Compressed Bio-Gas (CBG) production plants being set up under the Sustainable Alternative to Affordable Transportation (SATAT) scheme. can go. Such measures will help increase local income and livelihood opportunities, in turn encouraging rural households to use LPG regularly.

In August, the Prime Minister launched the Ujjwala 2.0 scheme to distribute 10 million additional free LPG connections to poor families. This reflects the government’s commitment to promoting energy access to clean cooking. But ensuring timely availability of LPG cylinders for affordability and refills could be a must to wean households away from polluting biomass and the investments made in the Ujjwala scheme in the last five years would have been reaping the benefits. Such efforts will go a long way in improving the health and well-being of our citizens.

Shalu Agarwal is a senior program lead and Sunil Mani is a program associate at the Council on Energy, Environment and Water (CEEW), an independent not-for-profit policy research institute