The Non-Linear Effects of Energy Efficiency Gains on the Incidence of Energy Poverty

Abstract

Energy poverty is defined as insufficient access to modern energy resources which are relatively cleaner than the traditionally utilized ones. In this regard, the incidence of energy poverty is particularly higher in the cases of the developing countries across the globe. Accordingly, the chronic energy poverty issues in the developing countries within Sub-Saharan Africa have become a major socioeconomic and environmental concern for the associated governments. Hence, this study aims to evaluate the effects of energy efficiency gains and shocks to other key macroeconomic factors on energy poverty in the context of selected Sub-Saharan African nations. In this study, we measure energy poverty in terms of the lack of access to clean cooking fuels and technologies for the population of the selected Sub-Saharan African countries. The overall findings from the common correlated effects panel regression analysis reveal that energy efficiency gains initially aggravate the energy poverty situation but improve it later on; consequently, a U-shaped relationship between energy efficiency and access to clean cooking fuels and technologies is evidenced. Besides, the predicted threshold levels of energy efficiency are observed to be higher than the average energy efficiency level of the Sub-Saharan African nations. Moreover, the results also portray that economic growth, carbon dioxide emissions, foreign direct investment inflows, and international trade are effective in reducing energy poverty. Conversely, financial development is witnessed to be ineffective in influencing the incidence of energy poverty in this region.