Can digitalization alleviate China's energy poverty? Empirical investigation and mechanism analysis

Abstract

Addressing energy poverty is crucial for establishing a decarbonized economy that promotes energy equity and shared prosperity, through which the catalytic role of digitalization should be firmly prioritized. The novelty of this study lies in modelling the causal nexus between digitalization and energy poverty and identifying transmission channels. This study validates a negative correlation between digitalization and energy poverty by leveraging a unique household-level dataset, including 2014, 2016, and 2018, underscoring its instrumental role in alleviating energy poverty after performing a Two-Stage Latest Square approach. However, the extent of these mitigating effects varies among household groups according to income, age, and rural-urban disparities. Further mechanism analyses present that digitalization in China alleviates energy poverty by reducing income poverty, enhancing social capital mobility, bolstering the private business sector, and decelerating the trend of an aging population. These findings offer significant insights for emerging and developing economies that aim to tackle energy poverty through digitalization.