Large scale renewable energy deployment reduces regional economic inequality:Evidence from China

The 17 Sustainable Development Goals (SDGs) proposed in the 2030 Agenda for Sustainable Development includes ensuring access to sustainable modern energy, as well as reducing inequality within countries. These goals may interact with each other, but research examining the impact of renewable energy deployment on economic inequality remains limited. To fill this gap, we estimate a city-level Dagum Gini coefficient from county-level nighttime lights to measure regional economic inequality, providing a production-side proxy with fine spatial resolution. And the difference-in-difference (DID) model is utilized in this study to identify the impact of renewable energy deployment on regional economic inequality, using a unique full sample dataset of China's renewable energy projects from 2001 to 2020. The empirical results indicate that the renewable energy deployment reduces regional economic inequality. Specifically, for every 1 GW of biomass and solar PV deployed in a city, the Gini coefficient is reduced by approximately 0.038–0.064 and 0.018–0.020, respectively, while wind energy deployment seems to have minimal impact on regional economic inequality. This study further confirms that the promotion of rural employment and the upgrading of the industrial structure are key mechanisms through which renewable energy deployment contributes to reducing regional economic inequality. Furthermore, increased investment in education and improved transport infrastructure would enhance the effect of renewable energy deployment on reducing regional economic inequality. Consequently, this research offers valuable insights for the strategic deployment of renewable energy not only in China and other developing countries but also for policy makers endeavoring to create policy synergies aligned with the SDGs.