Modeling the Impact of Fiscal Decentralization on Energy Poverty: Do Energy Efficiency and Technological Innovation Matter?

Abstract

As an important factor affecting economic and social development, energy poverty (EP) has received widespread concern, and many countries have actively proposed policies to eliminate energy poverty. The purpose of this paper is to clarify the current situation of energy poverty in China, explore the factors that affect energy poverty, find sustainable and effective approaches to alleviate energy poverty, and provide empirical evidence for eliminating energy poverty. This research investigates the effect of fiscal decentralization (FD), industrial structure upgrading (ISU), energy efficiency (EE), and technological innovation (TI), as well as urbanization (URB) on energy poverty using a balanced dataset of 30 provinces in China from 2004 to 2017. The empirical outcomes revealed that fiscal decentralization, industrial upgrading, energy efficiency, and technological innovation significantly reduce energy poverty. Moreover, urbanization is positively and significantly correlated with energy poverty. The outcomes further revealed that fiscal decentralization significantly increases the residents’ access to clean energy and drives energy management agencies and infrastructure. In addition, the heterogeneity analysis results indicate that the effect of fiscal decentralization in reducing energy poverty is greater in regions with high economic development. Finally, mediation analysis denotes that fiscal decentralization indirectly reduces energy poverty by promoting technological innovation and energy efficiency. Finally, based on the results, policy suggestions for eradicating energy poverty are proposed from the perspective of implementing targeted energy alleviation policies reasonably dividing the rights and responsibilities of local and central governments and encouraging scientific and technological innovation.