Rural household nonagricultural income and energy transition: Evidence from central China

Abstract

Promoting China's energy transition is essential for achieving low-carbon development and achieving the nation's carbon neutrality target. Previous research has primarily focused on industrial production energy consumption transition paths, and rural household energy consumption has rarely been investigated. This study focuses on the impact of nonagricultural income on rural household energy consumption in the Huang-Huai-Hai region using questionnaire data, examining the contribution of rural households' nonagricultural income to the energy consumption transition (i.e., from dirty energy sources such as firewood to clean energy sources such as liquified petroleum gas (LPG)). Instrumental variable two-stage least squares (IV-2SLS) estimation and IV-tobit models are applied to solve potential endogeneity problems. The results demonstrate that nonagricultural income can promote rural households' energy structure transformation, increase spending on clean energy such as LPG and electricity, and decrease expenditure on dirty energy sources such as coal and firewood. Further examination reveals that nonagricultural income can enable rural households to afford modern necessities and transition to cleaner, more efficient energy. The study proposes promoting rural energy structure transformation to boost sustainable development and increase nonagricultural income. Strengthening skills training, encouraging more off-farm employment, and other approaches will diversify rural households' income.