Abstract Improving energy services for poor households in developing countries remains one of the most pressing challenges facing the development community. The dependence of these households on traditional forms of energy leads to significant health impacts as well as other major disbenefits, yet there has been little progress in meeting this challenge. This viewpoint argues for an ‘energy-poverty alleviation’ fund to help provide modern energy services to these households. It also proposes an approach through which to create such a fund, namely by introducing an incremental levy on petroleum. Notably, this scheme does not need a global agreement since a levy could be introduced by major oil-exporting countries. The implementation of this mechanism would result in a climate-friendly outcome (even before taking into account the elimination of products of incomplete combustion resulting from the traditional household use of biomass-based fuels) while providing immense socio-economic benefits to the world's poor. Such an approach would allow significant progress on the sustainable development front while reducing global greenhouse gas emissions, and therefore is very much consistent with the United Nations Framework Convention on Climate Change.