Research on the energy poverty reduction effects of green finance in the context of economic policy uncertainty

Abstract

Although considerable literature has focused on the energy poverty reduction effects of green finance, the context of economic policy uncertainty has been paid little attention. Based on Chinese provincial panel data from 2004 to 2020, this paper studies the relationship between green finance and energy poverty the using system generalized method of moments and examines the impacts of economic policy uncertainty by the panel vector autoregressive model. Our findings indicate that the development of green finance effectively alleviates energy poverty in both the short and long terms. From the evolution path perspective, green finance mainly focuses on improving availability and cleanliness in the initial stage, subsequently, efficiency and completeness. In addition, the rising uncertainty in economic policy will decline clean energy investment, thereby hindering the energy poverty mitigation effects of green finance. The government should maintain the development of green finance through fiscal and tax measures while strengthening financial regulations. The government should also try to consider the efficiency and completeness of clean energy supply in the initial stage of an energy poverty eradication strategy. Furthermore, reducing the uncertainty of economic policy and guiding private investors and state-owned investors into clean energy transition are of great importance.