How green finance can bridge the energy poverty gap: Policies to mitigate socioeconomic and environmental consequences

Abstract

Promoting renewable energy consumption is widely accepted as an effective policy to reduce energy poverty. This study investigates the relationship between green finance and energy poverty using the Fully Modified Ordinary Least Square (FMOLS) model, utilizing data from 20 developing Asian countries from 2010 to 2021. The results confirm that a 1% increase in the sustainable financing market reduces the energy poverty gap in these Asian countries by nearly 0.02%. As a proxy of technological progress, the innovation index exacerbates energy poverty. Moreover, a 1% increase in sustainable electricity production reduces the energy poverty gap in these countries by approximately 0.35%. An increase in the consumer price index harshly impacts energy justice. Critical policy implications for developing Asian economies are sustainable power generation, establishing digital green finance, utilizing green cryptocurrencies, and improving green literacy.