Evaluating the relationship between income inequality, renewable energy and energy poverty in the V4 countries

Abstract

The European Union has prioritized addressing energy poverty, as outlined in the “Clean Energy for all Europeans Package”. The recent international context dominated by the COVID-19 pandemic and Russia war in Ukraine, have exacerbated this issue because of the substantial energy prices growth. Since eradicating energy poverty necessitates long-term policy implementation, the primary objective of this study is to evaluate the impact of income inequality and other economic and social factors (output per capita, renewable energy use) on energy poverty as measured by three indicators (total utility bill arrears, utility bill arrears for households with dependent children, population unable to maintain adequate). The findings based on mean group estimators for the V4 (Poland, Hungary, Czech Republic, Slovakia) countries from 2005 to 2022 suggest that income inequality, proxied by the Gini index, exacerbates energy poverty. However, sustainable economic growth has the potential to alleviate energy poverty. Policy recommendations include reducing income inequality, reforming renewable energy policies, to encourage the development of renewable energy sector and green industries.