Does transitioning to green energy alleviate environmental degradation and energy poverty?

¹ School of Mathematical Sciences, Universiti Sains Malaysia, 11700 Minden, Penang, Malaysia.
² Faculty of Economics and Business, Universitas Muhammadiyah Yogyakarta, 55183 Bantul, Indonesia.

^* Corresponding author: sksek@usm.my

Abstract

This study applies quantile regression to examine to what extent transitioning to green energy through renewable energy consumption (RE) could mitigate environmental degradation and energy poverty by comparing three income groups, namely, high income, middle income and low income countries. The data spanned from 2000Q1 to 2023Q4. The results show that RE foster environmental quality improvement by reducing carbon dioxide emissions (CO₂) in three income groups. The magnitudes vary across quantile levels, signifying a non-constant relationship, with lower income group exhibits higher explanatory power. RE also leads to improvement in energy poverty (EP1 - access to electricity; EP2- access to clean fuel) in low income group, while the impacts are mixed in high and middle-income groups. The low-income economies are expected to experience a higher rate of improvement in mitigating energy poverty and environmental pollution compared to other economies, due to their current lower baseline and the significant potential for growth and adoption of modern, clean energy systems. While promoting greener policy implementation, the issues such as income inequality, cost of installation, and inequality to access should be resolved, so that the poorest and the most needed one are benefitted.