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Are renewables affecting income distribution and increasing the risk of household poverty?

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  • Pereira, Diogo Santos
  • Marques, António Cardoso
  • Fuinhas, José Alberto

Abstract

The worldwide electricity mix has become diversified, mainly through the exploitation of endogenous and green resources. However, doubt has been cast on the much-vaunted advantages of renewables due to some of their characteristics, such as availability, security and affordability. In fact, growth in the installed capacity of renewable energy has increased electricity prices, which raises the question of how households have withstood the cost of energy transition. The main aim of this study is to empirically assess and discuss: (i) whether different types of household have suffered dissimilar effects from the promotion of renewables; (ii) the consequences of promoting renewables on household income; and (iii) if the promotion of renewables has reduced the risk of poverty and social exclusion. A panel data of European countries has been analysed using Kao's residual cointegration test, and an Autoregressive Distributed Lag approach, to assess the relationships. This paper proves that both income and risk of household poverty are directly linked with renewable energies, in both the short- and long-run. The energy transition to renewables has had negative consequences for households. Thus, the disadvantaged households should be helped to meet the increased cost arising from the energy transition.

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  • Pereira, Diogo Santos & Marques, António Cardoso & Fuinhas, José Alberto, 2019. "Are renewables affecting income distribution and increasing the risk of household poverty?," Energy, Elsevier, vol. 170(C), pages 791-803.
  • Handle: RePEc:eee:energy:v:170:y:2019:i:c:p:791-803
    DOI: 10.1016/j.energy.2018.12.199
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