[Stoves] Indonesia stove accomplishments, and LPG subsidy (Paul Anderson)

[Traveller]

Paul:

Permit me a few words since you said comments from others are also welcome.

You ask,

"How long can that LPG assistance last?   The words "sustainable"
and "renewable" do not appear with the discussions about LPG."

One possible answer from a finance minister might be:

"In 2014 the LPG subsidy was $3.2 b and electricity subsidy twice as much
in 2014. Now that oil prices are lower, so is the LPG subsidy, and I cannot
predict how long that would last. For 2017, I have approved $ 6 b for LPG
and electricity, a third lower than in 2014, and I have also approved new
programs for bioethanol. My revenues from taxes on oil and gas industries
are also lower, and I cannot predict those either. In the last 30 years,
Indonesia's urban population grew three-fold, from around 40 m to 125 m,
and per capita income also grew three-fold.  We couldn't have continued
with kerosene and we cannot but use LPG. The subsidies aren't all going to
the poor, but it's the urban middle class and working class I have to cater
to."

That is, from banking and public budgeting perspectives, subsidies are an
issue but not urgent. Energy pricing reforms have a tumultuous history
around the world, and it is not always clear how to get the prices right
and how to set the subsidy support right. Muddling through is politics.

Getting prices and subsidies right is also a problem for the biomass/solar
alternatives to LPG and electricity for cooking. What does "sustainable"
and "renewable" have to do with food and fuel riots in the streets?

The crux of the biomass/solar advocates' problem is this -- not enough RD&D
to prove that the alternatives are acceptable to masses and can be scaled
up confidently at a relatively flat supply curve.

It is not a single technology but a program of fuel, device, and operating
practices that can promise substantial reductions in traditional biomass
combustion as fast as LPG and electricity.  I also happen to think that
obsessing only over poor households and "complete solutions" Is shooting
ourselves in the foot before starting; there are commercial cooking markets
that can readily take better biomass stoves and solar thermal appliances,
if only for partial cooking.

*****

Poor people cannot afford to obsess over WBT methods and ISO ratings. Nor
can poor governments pressed to deliver results that people demand.
ISO/WHO/EPA rattle is a side-show for governments with some $10-15 b a year
in LPG/gas/kerosene/electricity subsidies (just for the household market).

On the other hand, such subsidies may also have other benefits. If LPG and
electricity can liberate cooks from 4 billion Indonesian personhours per
year from cooking (I reckon a total of 60 billion personhours) for more
productive purposes -- education, even watching television - or comfort -
less drudgery, more time to spend on children - then I think $2 billion
subsidy is an investment in human capital.

The fault lies in our stars and ourselves, just that we don't get out of
the smokey cottages and look at what the stars are telling us.

If the whole Indian biomass stove program went Up in Smoke, perhaps GACC
should take it over, raise funds for it (and also for Indonesia), and
jump-start a "clean cooking and heating in Asia".

A case has to be made that a $100 m a year program over four years for
alternative biomass and solar cooking can deliver the same consumer
satisfaction as that from LPG and electricity.  I hope the World Bank
builds on the CSI project in Indonesia as far as contextual design and
promotion of biomass cookstoves is concerned, instead of waiting for ISO
and the Goldman-Sachs $/aDALY campaign.

Nikhil
-----------

PS: I picked 30 years because of personal involvements on Indonesia over
the years. Some 35 years ago I first got into the economics and politics of
kerosene subsidies in Indonesia, then a major oil exporter (now a net
importer). A few years later, I worked on LPG market potential for
Indonesia -- both as a lighting source (Arthur D. Little had done some work
on LPG lanterns) and as a cooking substitute for LPG. Electricity could
also take out kerosene from lighting.

I did several scenarios for the "residential" and commercial sector use of
kerosene, LPG, and electricity. (Discovering in the process that a huge
amount of kerosene was used for making ice!) The team-leader got tired of
my energy balances and said, "Look, man. Think like a finance minister. How
much am I paying for kerosene subsidy right now, even if it is from
Pertamina's account and not my national account? What would your scenario
mean for investments and operating expenses for rural electrification and
for LPG network?"

Ah. I think I did only one energy balance after that, if at all. I did look
at Indonesia kerosene, LPG and electricity markets after that but wasn't
much bothered.

>
> ------------------------------
>
> Message: 5
> Date: Thu, 23 Feb 2017 22:42:41 -0600
> From: Paul Anderson <psanders at ilstu.edu>
> To: Discussion of biomass cooking stoves
>         <stoves at lists.bioenergylists.org>,  Yabei Zhang - World Bank
> - Indonesia RBF <yzhang7 at worldbank.org>, Laurent  Durix - WB <
> ldurix at worldbank.org>, Renjie Dong - China <rjdong at cau.edu.cn>
> Subject: [Stoves] Indonesia stove accomplishments, and LPG subsidy
>         .... was..Re:  Please help locate people
> Message-ID: <44700543-6e49-4a95-eb6b-f123942b94cb at ilstu.edu>
> Content-Type: text/plain; charset="windows-1252"; Format="flowed"
>
> Dear Iwan,
>
> My questions are in my original message (below).  The other three
> have also made contact and a response has been assured for next week.
>
> What was accomplished in Indonesia is very encouraging.  And also
> shows that additional solutions can be considered.   My main comment is
> that the higher priced clean stoves were excluded in the Indonesis
> RBF program, but could be quite important parts of the solutions in
> other circumstances, such as when there are carbon credits to help finance
> the efforts.
>
> Would you please write to us (the Stoves Listserv) about your thoughts and
> role as a "Biomass Energy Promotion Practitioner". And include the scope of
> your efforts and what needs to be done with such work.
>


> Personally I am especially interested in your thoughts about
>
> 1.  TLUD and other micro-gasifier stoves.
> 2.  The role of LPG in light of the massive subsidies needed to attain and
> maintain LPG stoves/fuel for impoverished households. The presentation you
> made says (slide 3):
> > . Cost to national budget of 3 kg LPG subsidy is not trivial anymore:
>  Was IDR 48 Trillion (~ USD 3.2 Billion) in 2014, or half of electricity
> subsidies and close to 0.5% GDP .
> And that is based on about 60 million LPG stove/cylinder free distribution
> to poor households.   [And there are still many millions of households with
> bad or mediocre ICS stoves.]
>
> How long can that LPG assistance last?   The words "sustainable"
> and "renewable" do not appear with the discussions about LPG. (Comments
> from others are also welcome.)
>
> Paul
>
> Doc  /  Dr TLUD  /  Prof. Paul S. Anderson, PhD
> Email:  psanders at ilstu.edu
> Skype:   paultlud    Phone: +1-309-452-7072
> Website:  www.drtlud.com
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