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High LPG prices are scorching the air pollution fight

Reinstating subsidies on LPG refills for low-income households can help reverse families going back to polluting fuels

December 09, 2021 12:02 am | Updated 01:06 am IST

Guwahati, Assam, 01-06-2018: An employee carries LPG cylinders for distribution in Guwahati on 01 June 2018. After the hike in petrol and diesel prices, the cost of Liquefied Petroleum Gas (LPG) was also increased on Friday by Rs 2.34 and Rs 48 for subsidised and non-subsidised cylinders respectively. The move comes amid heat over the rising petrol prices across the country. Currently, the government provides subsidy on LPG cylinders. Households in the country are allowed 12 cylinders a year at subsidised rates, according to current rules. Any consumption beyond this limit is charged at non-subsidised rates. Photo: Ritu Raj Konwar

Guwahati, Assam, 01-06-2018: An employee carries LPG cylinders for distribution in Guwahati on 01 June 2018. After the hike in petrol and diesel prices, the cost of Liquefied Petroleum Gas (LPG) was also increased on Friday by Rs 2.34 and Rs 48 for subsidised and non-subsidised cylinders respectively. The move comes amid heat over the rising petrol prices across the country. Currently, the government provides subsidy on LPG cylinders. Households in the country are allowed 12 cylinders a year at subsidised rates, according to current rules. Any consumption beyond this limit is charged at non-subsidised rates. Photo: Ritu Raj Konwar

The sustained rise in the price of LPG cylinders has been burning a hole in many a household budget for more than a year now. The price of LPG refills has risen by more than 50% to over ₹900 per cylinder in November this year compared to around ₹600 over the past year. With no refill subsidies in place since May 2020, there is genuine concern about many households now slipping back to using polluting solid fuels for cooking, such as firewood and dung cakes.

A start

Solid fuel use for cooking is the leading contributor to air pollution and related premature deaths in India, estimated to be around over 600,000 every year, as per the Global Burden of Disease Study 2019. To tackle this issue head-on, the Government of India has taken several measures to improve access to clean cooking energy. For instance, under the Pradhan Mantri Ujjwala Yojana scheme, the Government distributed more than 80 million subsidised LPG connections. But how far have we managed to dissuade households from biomass? What more do we need to do as a country to move the needle further?

Sizing up India’s LPG revolution. Good news first. As per the India Residential Energy Survey (IRES) 2020, conducted by the Council on Energy, Environment and Water (CEEW) and the Initiative for Sustainable Energy Policy, LPG has now replaced biomass as the most common cooking fuel in India. Nearly 85% of Indian homes have an LPG connection and 71% use it as their primary cooking fuel, compared to only 30% a decade back. This reversal of trends could be attributed to the success of the Ujjwala, consumption-linked subsidies and gradual strengthening of the LPG distributorship. Needless to say, this would have significantly influenced the sector’s contribution to air pollution.

However, the battle is only half won. Around 30% of Indian households continue to rely on biomass as their primary cooking fuel, mainly due to high LPG prices. Another 24% stack LPG with biomass. The practice of biomass usage is predominantly concentrated in rural areas, particularly among States such as Bihar, Jharkhand, Chhattisgarh, Madhya Pradesh, Odisha and West Bengal. Urban slums are also critical hotspots where the use of biomass for cooking is widely prevalent. Easy availability of free biomass and lack of home delivery of LPG refills further reduce the efficacy of LPG as a reliable and affordable proposition.

Reinstate subsidies

To sustain the country’s momentum on clean cooking energy access and thereby, cleaner air for all, we propose three key steps.

First, reinstate the subsidies on LPG refill for low-income households. At the current refill prices, an average Indian household would have to spend around 10% of its monthly expense on LPG to meet all its cooking energy needs.

According to a CEEW study, this is just double the actual share of reported expenses on cooking energy (as of March 2020). In fact, nearly half of all Indian households will have to at least double their cooking energy expense to completely switch to LPG at current prices. Given the loss of incomes and livelihoods during the novel coronavirus pandemic, the ability of households to afford LPG on a regular basis has taken a further hit. Thus, resuming subsidies would be critical to support LPG use in many households. Our estimates suggest that an effective price of ₹450 per LPG refill could ensure that the average share of actual household expenditure on cooking energy matches the pre-pandemic levels. The Government could take this into account as it reconsiders resuming LPG subsidy.

The Government can also explore diverse approaches to identify beneficiaries. This may include limiting the subsidy provision to seven to eight LPG refills annually and excluding well-to-do households using robust indicators. For instance, lowering the income-based exclusion limit for LPG subsidy to ₹2,50,000 a year from ₹10 lakh a year or excluding families owning a non-commercial four-wheeler vehicle can significantly reduce the number of eligible beneficiaries. At the bare minimum, subsidy must be resumed for the households granted LPG connections under the Ujjwala scheme.

Availability and biomass

Second, boost timely availability of LPG for all consumers. Only half the rural LPG users receive home delivery of LPG refills, while the rest have to travel about five kilometres one way to procure a cylinder. Gaps in the doorstep delivery of LPG cylinders are also present in urban pockets, particularly in slum areas. This is a major factor behind the use of biomass among urban slum households. There is a need to strengthen the LPG supply chain and enforce timely service delivery, particularly in States with a large number of Ujjwala connections and slum population. This must be complemented by higher incentives for rural distributors, who have to otherwise service a low but distributed demand at similar commissions. Looping in self-help groups could also help aggregate demand and create jobs in distant areas.

Third, create a new market for locally available biomass. The Government needs to pilot initiatives focused on promoting the use of locally available biomass in decentralised processing units that manufacture briquettes and pellets for industrial and commercial establishments. For instance, the National Thermal Power Corporation recently invited applications to supply biomass pellets to fire their power stations. The Government can incentivise entrepreneurs to participate in such activities. Similarly, households can be incentivised to supply locally available biomass (including crop stubble or dung cakes) to Compressed Bio-Gas (CBG) production plants being set up under the Sustainable Alternative Towards Affordable Transportation (SATAT) scheme. Such measures would help enhance local income and livelihood opportunities, in turn encouraging rural families to use LPG on a regular basis.

In August, the Prime Minister launched the Ujjwala 2.0 scheme to distribute 10 million additional free LPG connections to poorer households. It shows the Government’s commitment towards promoting clean cooking energy access. But ensuring affordability and timely availability of LPG cylinders for refills would be a must to wean households away from polluting biomass and reap the benefits of the investments made in the Ujjwala scheme over the past five years. Such efforts would go a long way in improving the health and well-being of our citizens.

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

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