Impact of energy transitions on energy poverty in the European Union

Abstract

While there is a consensus on the importance of energy transitions for achieving a zero-carbon economy, concerns about unfavorable social impacts on most vulnerable groups have often been raised. This study examines the complex links between energy transitions, economic growth, income inequality, and energy poverty in 27 EU countries, based on panel data from 2011 to 2020. The study introduces a new energy poverty measure incorporating six indicators using principal components analysis (PCA). Our method of moments quantile regression (MMQR) model captures asymmetries in the data collected from Eurostat and the World Bank without compromising accuracy. The results reveal the significant impact of income inequality measured by the Gini coefficient and economic wealth measured by GDP per capita on the energy poverty rate. The predicament is exacerbated by long-term unemployment in countries experiencing high levels of energy poverty. GDP growth remains unexplained by the model suggesting the weak connection between households’ vulnerability and macroeconomic cycles. Ultimately, energy transitions exhibit an ambiguous influence on energy poverty. In the countries heavily impacted by energy poverty, energy transitions have a mitigating role. We recommend focusing on income inequality and long-term unemployment when targeting energy poverty.

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