The nexus of climate policy uncertainty, renewable energy and energy inequality under income disparities

Abstract

This study has made a significant contribution to the literature on energy inequality by utilizing an economic-environmental framework to investigate this phenomenon across different income groups of countries worldwide. The study employed the Theil index to calculate intra-regional and inter-regional energy inequality among high-income, upper-middle-income, and lower-middle-income countries during the period 2001–2020. The study further examined the impact of key economic and environmental factors, including climate policy uncertainty (CPU), renewable energy consumption (RE), financial development (FD), income, and urbanization (UR), on energy inequality using a Two-Stage Least Square Method (2SLS) model. The findings indicated a negative impact of CPU, FD, and income on energy inequality, while UR was found to exacerbate energy inequality. RE was found to reduce intra-regional inequality in high-income and upper-middle-income countries, but it was found to worsen inter-regional inequality. These findings highlight the importance of addressing key economic and environmental factors to achieve equitable distribution of energy consumption and access to energy services.