Climate change and energy poverty: Evidence from China

Abstract

Climate change, characterized by fluctuations in temperature and precipitation, presents significant challenges to household welfare. This study offers novel insights into how climate change influences household energy poverty. Leveraging data from the 2015 and 2018 China General Social Survey, we apply clustering analysis and a pseudo-panel data model to investigate the effects of temperature and precipitation variations on both the incidence and intensity of household energy poverty, as well as the mechanisms driving these outcomes. Our findings reveal that climate change, manifested in widening temperature deviations and increasing precipitation, significantly heightens both the incidence and intensity of household energy poverty. Specifically, urban households and those in southern regions demonstrate greater vulnerability to amplifying temperature fluctuations, whereas rural households, northern residents, and low- to middle-income groups are more susceptible to the impacts of precipitation changes. Rising temperature deviations exacerbate energy poverty by driving up energy demand, while increased precipitation intensifies it by augmenting off-farm labor transfers. However, temperature and precipitation changes can also mitigate poverty by boosting crop yields. This study is the first to incorporate precipitation changes into the energy poverty discourse. The findings underscore the critical need to account for climate change when devising policies aimed at addressing household welfare loss and alleviating energy poverty.