Unpacking the Nonlinear Effects of Renewable Energy on Socioeconomic Disparities Across the Global South

The global energy transition is frequently advocated as a means to achieve environmental sustainability. However, its distributional impacts remain inadequately understood, particularly in developing nations where approximately 666 million individuals still lack access to electricity. This study investigates whether the expansion of renewable energy consumption mitigates or exacerbates socioeconomic inequality across 82 developing economies from 2000 to 2022. Employing a multi-method econometric framework that considers cross-sectional dependence, heterogeneity, and nonlinear dynamics, we analyze three dimensions of equity: income inequality, monetary poverty, and disparities in electricity access between urban and rural populations. The findings reveal a complex relationship. While the expansion of renewable energy is associated with improvements in income distribution, it is also linked to persistent poverty and unequal access to energy services. This tension reflects what we term the “biomass paradox,” wherein the continued reliance on traditional biomass in low-income countries constrains the inclusiveness of energy transitions. Quantile regression analysis reveals that the effect of renewable energy reverses across the distribution: renewable energy slightly widens the energy access gap in countries where disparities are already small, but narrows it substantially in countries where the gap is widest. The results further indicate that the equity effects of renewable energy vary across contexts and are particularly sensitive to initial conditions and institutional capacity. In settings with weak governance, renewable expansion shows no statistically distinguishable effect on equity outcomes, whereas in stronger institutional environments, its effects become more transformative. These findings suggest that aggregate renewable energy targets that do not differentiate between traditional and modern sources may be misleading. More broadly, achieving a just energy transition necessitates not only expanding renewable capacity but also strengthening governance frameworks and directing investments toward contexts where energy inequalities are most pronounced.