Renewable Energy and Energy Poverty in South Asia
Renewable Energy and Energy Poverty in South Asia
Hosan, Shahadat
International Institute for Carbon-Neutral Energy Research (WPI-I2CNER), Kyushu University
[Link]
The Link Between Renewable Energy Use and Energy Poverty: Panel Estimation For
South Asian Region
Md. Matiar Rahman1,3, Shahadat Hosan1,2, Shamal Chandra Karmaker1,2,3, Abu Zar Md. Shafiullah3 and Bidyut Baran
Saha1,2*
1
International Institute for Carbon-Neutral Energy Research (WPI-I2CNER), Kyushu University, 744 Motooka, Nishi-ku,
Fukuoka-shi, Fukuoka 819-0395, Japan
2
Mechanical Engineering Department, Kyushu University, 744 Motooka, Nishi-ku, Fukuoka-shi, Fukuoka 819-0395,
Japan
3
Department of Statistics, University of Dhaka, Dhaka-1000, Bangladesh
*
Corresponding author email: [Link].213@[Link]
Abstract: The incapability of people to have sufficient access to energy sources is known as energy poverty. It is a multi-
faceted and complex problem. This research looks into how renewable energy use, economic growth, urbanization,
employment, and the consumer price index are all linked to energy poverty in South Asian nations. The relationship between
the analyzed factors in this region has not been thoroughly investigated so far. As a result, the goal of this research is to
look at the dynamic relationships between these variables in the most energy-intensive countries of South Asia using
advanced econometric methods for the years 2000 to 2020. This analysis imply that renewable energy reduces energy
poverty. Furthermore, energy poverty is inversely correlated with economic growth and employment, but positively
associated with urbanization. The findings provide a foundation for energy policymakers that would help them to achieve
the objective of Sustainable Development Goals (SDGs).
Keywords: CCEMG; Energy poverty; Panel cointegration; Renewable energy; South Asia
Westerlund methods. 4) parameter estimation with As shown in Equation 7, the tests outlined above are
common correlated effects means group (CCEMG). based on residuals computed from the long-run model:
m
yit = i + i t + ji x jit + uit (7)
j =1
3.1 Cross-sectional dependence tests
The cross-sectional dependency problem in panel data In Eq. 7, the cross-section units, number of predictors,
could be triggered by the relationship and dependence and number of cases are represented by i (1, 2,….N); j
across countries as a result of globalization and economic (1,2,….m) and t (1,2,…..,T). y and x are regarded to be
interaction [25]. The study conclusions from such first order integrated. The coefficients i , i , and ji
approaches may be skewed if the existence of cross-
expressed as trend effect, intercept, and slope,
section dependency is not taken into account in the panel
respectively, and uit is the random errors. Eq. (8) can be
[26–28]. As a result, in order to address this issue in the
research, we performed cross-sectional dependence (CD) used to show the estimated residuals:
tests. The cross-section dependence is determined using it = i uit −1 + it (8)
Breusch and Pagan's [29] LM test and Pesaran's [30] CD
test. Cross-sectional units are assumed to be independent The null hypothesis in the preceding test is Ho: ρi = 1,
in the null hypothesis, but cross-sectional units are which implies that there is no cointegration, as opposed
assumed to be dependent in the alternative hypothesis. to the alternative (H1: ρi < 1), which specifies that all
The following equation is used to determine the Breusch panels are cointegrated.
and Pagan LM test results:
N −1 N 3.4 Estimation of long run coefficient
LM BP = T
i =1 j =i +1
ˆ 2
ij (3) Long-run parameters must be estimated after confirming
that the variables are cointegrated. CCEMG (common
correlated effects mean group) [38] can be used to
If the value of T is relatively large, the LM test is
measure long-run characteristics. The CCEMG estimator
ineffective. Pesaran suggests the following CD test as an
is resistant to structural breaks and unobserved non-
alternative to solving this problem:
stationary common components. As a result, in this work,
N −1 N
2T the CCEMG technique is used to estimate the parameters
CDP = ˆij2 (4)
N ( N − 1) i =1 j =i +1 of the examined relationships. The CCEMG use the
following method for estimating:
Where T denotes the year, N is the number of countries,
and rˆij indicates the relationship between the error in Eq.
2
yit = i + i xit + i yit + i xit + i ft + it (9)
(3) and Eq. (4). The dependent variable is yit, the independent
variable is xit, the slope of the exogenous component is
3.2 Unit root tests βi, the group fixed effects are αi, the unobserved common
To establish the order of data, unit root analysis is used factor is ft, and the residual is εit. As seen below, the
[28,31]. This method detects if a series is stationary or CCEMG estimator is developed by taking the average of
not (unit root). CIPS and CADF, the second-generation each coefficient over each individual regression:
panel unit root tests, are used to solve cross-sectional N
dependency and produce the most flawless and consistent
findings. According to Pesaran [32], cross-section
CCEMG = 1
N
i =1
i (10)
augmented Dickey-Fuller (CADF) analysis is defined as
Where i is the expected value of i from Eq.(9).
follows:
200
Proceeding of International Exchange and Innovation Conference on Engineering & Sciences (IEICES) 7 (2021)
cross-section dependence exists for all variables in our poverty falls, and the association is statistically
study. significant at the 10% level of significance. The finding
of the study is desired. Other control variables, such as
Before analyzing cointegration, it is crucial to identify economic growth and employment, have a negative
whether or not the data are non-stationary. The CIPS and impact on energy poverty, implying that as GDP and the
CADF tests were utilized in this work to detect unit roots number of employees rise, so does energy poverty. On
in the variables under investigation. The results of these the other hand, urbanization has a positive and
two tests are summarized in Table 4. statistically significant impact on energy poverty,
indicating that urbanization and energy poverty are
Table 4. the results of panel unit root test. proportionally related. This method also reveals that a
Variable CIPS CADF country's consumer price index and energy poverty have
Level 1st diff. Level 1st diff. a reciprocal relationship.
EP -3.536 -6.264*** -3.573 -5.106**
lnRE -3.053 -3.367*** -6.26** -8.36*** Fig. 2 depicts the long-run causalities of the variables
**
lnEG -3.815 -4.337** -2.556 -3.287** studied.
*
lnEMP -1.181 -4.801** -2.185 -4.531**
Renewable
lnUP -1.650 -2.831* -2.477 -4.200*
Energy
lnCPI -4.090* -2.690** -8.034 -9.795**
Significant at (* 10% ** 5%, *** 1%) level.
Table 5. Results of panel cointegration tests. Fig. 2. The long-run causality among studied variables.
Approaches t-value
Pedroni (1999, 2004) The findings of the CCEMG investigation showed long-
Modified Phill-Perron t 5.3654** run relationships, with implications for researchers and
Phill-Perron t -5.2351** policymakers on how to effectively realize the prospects
Aug. D-Fuller t -2.2541*** to eliminate energy poverty by utilizing renewable
Westerlund (2005) energy in the energy sector to increase economic
Variance ratio 3.2654** performance in the digital economy era.
Significance level ( 10% 5%, *** 1%).
* **
5. CONCLUSIONS AND POLICY
In these tests, the null hypothesis is that there is no IMPLICATIONS
cointegration in the panel. Table 5 reveals that the This study discusses at the link between renewable
variables studied have a long-term relationship, rejecting energy use and energy poverty in South Asian countries
the null hypothesis with a 5% significance level. This taking data from 2000 to 2020, considering economic
finding explains why all of the variables in the study are growth, employment, urbanization, and the consumer
cointegrated. The CCEMG approach is used to estimate price index as a control variable. To diagnose the causal
the long-run coefficients in this study, and the results are relationship between underlying variables, we used
shown in Table 6. second generation unit root tests, the Westerlund
cointegration technique, and the CCEMG estimation in
Table 6. Estimation of coefficients of CCEMG method. this research. Renewable energy consumption, economic
variables coefficients Std. error p-value growth, and employment all appear to have a negative
lnRE -0.2249* 0.2041 0.085 impact on energy poverty, according to the data.
lnEG -0.0765* 0.1627 0.077 Urbanization, on the other hand, exacerbates energy
lnEMP -1.0051* 0.7390 0.086 poverty in Southeast Asian nations.
lnUP 3.698** 1.9607 0.045 Access to sustainable energy is the key component of
lnCPI -0.0294 0.3298 0.226 economic growth, according to policy guidelines for
Significant at * 10% ** 5%, *** 1% level. Southeast Asian nations, and access to renewable and
modern forms of energy is an “important precondition”
The CCEMG findings show that renewable energy in combating energy poverty, promoting economic
consumption has a negative influence on energy poverty, growth, enhancing employment opportunities, and
indicating that as renewable energy use rises, energy
201
Proceeding of International Exchange and Innovation Conference on Engineering & Sciences (IEICES) 7 (2021)
supporting foundational social services. Focusing on planning: Insights from Greece, Energy Policy.
South Asian economies' policy instruments is critical for 91 (2016) 174–188.
lowering obstacles to renewable energy adoption, and it [Link]
is the golden thread that will bind economic growth, [14] M. Santamouris, J.A. Paravantis, D. Founda, D.
development, and environmental sustainability together. Kolokotsa, P. Michalakakou, A.M.
Papadopoulos, N. Kontoulis, A. Tzavali, E.K.
Stigka, Z. Ioannidis, A. Mehilli, A. Matthiessen,
E. Servou, Financial crisis and energy
consumption: A household survey in Greece,
6. REFERENCES
Energy Build. 65 (2013) 477–487.
[1] T.A. Hamed, K. Peric, The role of renewable
[Link]
energy resources in alleviating energy poverty in
[15] M.S. Gmbh, Measuring Fuel Poverty: General
Palestine, Renew. Energy Focus. 35 (2020) 97–
Considerations and Application to German
107. [Link]
Household Data, FinanzArchiv. 71 (2015) 178.
[2] V. Fred, J.M. Ntayi, F. Buyinza, F. Wasswa, M.
[Link]
Aarakit, C. Ndatira, Energy poverty in Uganda :
7593.
Evidence from a multidimensional approach,
[16] R. Lawson, J. Williams, B. Wooliscroft,
Energy Econ. 101 (2021) 105445.
Contrasting approaches to fuel poverty in New
[Link]
Zealand, Energy Policy. 81 (2015) 38–42.
[3] A. Sen, Poverty: An Ordinal Approach to
[Link]
Measurement, Econometrica. 44 (1976) 219.
[17] K.M. Brunner, M. Spitzer, A. Christanell,
[Link]
Experiencing fuel poverty. Coping strategies of
[4] M. González-Eguino, Energy poverty: An
low-income households in Vienna/Austria,
overview, Renew. Sustain. Energy Rev. 47 (2015)
Energy Policy. 49 (2012) 53–59.
377–385.
[Link]
[Link]
[18] S.C.A. Nierop, Energy Poverty in Denmark?,
[5] S. Bouzarovski, H. Thomson, M. Cornelis,
(2014) 52.
Confronting energy poverty in europe: A
[19] E. Phimister, E. Vera-Toscano, D. Roberts, The
research and policy agenda, Energies. 14 (2021)
dynamics of energy poverty: Evidence from
1–19. [Link]
Spain, Econ. Energy Environ. Policy. 4 (2015)
[6] H.U.R. Khan, K. Zaman, S.U. Yousaf, A.M.
153–166. [Link]
Shoukry, S. Gani, M.A. Sharkawy, Socio-
[Link].
economic and environmental factors influenced
[20] R. Miniaci, C. Scarpa, P. Valbonesi, Energy
pro-poor growth process: new development
affordability and the benefits system in Italy,
triangle, Environ. Sci. Pollut. Res. 26 (2019)
Energy Policy. 75 (2014) 289–300.
29157–29172. [Link]
[Link]
019-06065-2.
[21] D. Roberts, E. Vera-Toscano, E. Phimister, Fuel
[7] B. Brenda, Fuel poverty: from cold homes to
poverty in the UK: Is there a difference between
affordable warmth, Printer Pub Limited, 1991.
rural and urban areas?, Energy Policy. 87 (2015)
[8] M.M. Rahman, S. Hosan, S.C. Karmaker, A.J.
216–223.
Chapman, B.B. Saha, The effect of remittance on
[Link]
energy consumption: Panel cointegration and
[22] G.D. Kamalapur, R.Y. Udaykumar, Rural
dynamic causality analysis for South Asian
electrification in India and feasibility of
countries, Energy. 220 (2021) 119684.
Photovoltaic Solar Home Systems, Int. J. Electr.
[Link]
Power Energy Syst. 33 (2011) 594–599.
[9] L. Yijing, Y. Su, Y. Lin, L. He, L. Wu, X. Hou,
[Link]
C. Zheng, Energy Poverty and Education: Fresh
[23] D. Palit, Solar energy programs for rural
Evidence from a Panel of Developing Countries,
electrification: Experiences and lessons from
Build. Environ. 184 (2020) 107229.
South Asia, Energy Sustain. Dev. 17 (2013) 270–
[Link]
279. [Link]
[10] B. Legendre, O. Ricci, Measuring fuel poverty in
[24] B. World, Data Bank: World Development
France: Which households are the most fuel
Indicators, (2019).
vulnerable?, Energy Econ. 49 (2014) 620–628.
[25] S.C. Karmaker, S. Hosan, B.B. Saha, Does
[Link]
biomass energy consumption improve human
[11] J.D. Healy, J. Peter Clinch, Fuel poverty, thermal
development? Evidence from South Asian
comfort and occupancy: Results of a national
countries, Int. Energy J. 21 (2021) 81–92.
household - survey in Ireland, Appl. Energy. 73
[26] M. Aydin, The effect of biomass energy
(2002) 329–343. [Link]
consumption on economic growth in BRICS
2619(02)00115-0.
countries: A country-specific panel data analysis,
[12] L. Papada, D. Kaliampakos, Measuring energy
Renew. Energy. 138 (2019) 620–627.
poverty in Greece, Energy Policy. 94 (2016)
[Link]
157–165.
[27] Z. Wang, Q. Bui, B. Zhang, The relationship
[Link]
between biomass energy consumption and
[13] N.M. Katsoulakos, D.C. Kaliampakos,
human development: Empirical evidence from
Mountainous areas and decentralized energy
BRICS countries, Energy. 194 (2020) 116906.
202
Proceeding of International Exchange and Innovation Conference on Engineering & Sciences (IEICES) 7 (2021)
203