The impact of energy justice on local economic outcomes: Evidence from the bioenergy village program in Germany

Bioenergy Villages (BEVs) are a local energy concept that originated in Germany, using regionally sourced biomass to meet rural energy demand. BEVs are not only tangible representatives of the rural energy transition, but are also expected to improve distributional justice towards rural communities through the redistribution of economic benefits from renewable energy production. This study assesses the economic role of BEVs in the context of energy justice. The analysis uses regional data from Germany to empirically investigate the economic effects of BEV designation representing energy justice on median income, tax revenues, and employment shares. Due to concerns of endogeneity given the selection into the treatment (BEV designation), IV LASSO is applied to optimize the selection of adequate instruments and controls. We find positive economic effects on income and tax revenues but no clear effect on employment. BEV designation yields large-scale benefits for households and the broader community that improve distributional justice. Due to persistent financial, organizational, and technological access barriers, adoption rates of BEVs are, however, decelerating. From a policy perspective, the consideration of economic benefits in the evaluation of the assessment of BEVs is consequently crucial.