Dynamic influence of remittances on energy poverty eradication in Pakistan: A moderation analysis through consumption and investment

Energy poverty is a prevalent subject in Pakistan, and reducing it will accelerate the pace towards reaching targets of sustainable development goal 7 and carbon neutrality. Workers' remittances have proved to be a major income source in Pakistan, and it is not clear how they can be channeled to improve energy access and consumption to eradicate energy poverty. Therefore, this study is designed to investigate how remittances impact energy poverty in Pakistan, considering both weak (energy access and consumption) and strong (Multi‐Dimensional Energy Poverty Index [MDEPI]) forms of energy poverty. Data from 1990 to 2020 were gathered and analyzed using dynamic‐ARDL simulations to understand the empirical outcomes. The outcomes show that remittances effectively reduce MDEPI with a −0.056 coefficient. The results reveal that remittances reduce energy poverty through the consumption channel (−1.569); however, this relationship is ineffective in Pakistan. In the case of the weak form of energy poverty, the results supported the idea that remittances individually and through consumption and investment channels effectively alleviate energy poverty. Therefore, policies should be promoted to effectively and legally channel remittances to investment initiatives, which will build a vacuum for sustainable energy solutions and energy poverty eradication in Pakistan.