Should the European Union prioritize renewable energy or tackle energy poverty?

Abstract

Energy poverty is a type of poverty that is not solely based on monetary factors. It has recently been highlighted in the literature alongside the acknowledgment of energy as a key component of sustainable economic growth. Many studies focus on replacing fossil fuels with renewable energy sources to address this issue. This study aims to analyze the impact of renewable energy consumption on energy poverty in the European Union from 1996 to 2020. The study incorporates a control variable, developed using Principal Component Analysis (PCA), to account for economic development. Second-generation panel data tests and the Common Correlated Effects Model are utilized to assess the short and long-term effects. The findings indicate that the control variable had no significant impact on energy poverty during the relevant period. Still, renewable energy consumption had both positive effects in developed countries and negative effects in transition economies. According to the results, energy poverty measures remain a key priority in most of Europe's energy policies. This highlights the significance of ensuring that the underprivileged section of society has access to affordable and sustainable energy sources.