1. Introduction
In 2014, the United Nations put forward the Sustainable Development Goal (SDG) to “eradicate poverty in all its forms,” and energy poverty is commonly regarded to be a manifestation of poverty and a determinant of enduring poverty [
1], which has attracted widespread attention. Energy poverty restricts not only national economic development and social progress [
2], but also causes ecological damage and pollution by relying on the combustion of traditional biomass energy [
3]. Thus, energy poverty has been identified as a major global problem because of its adverse effects on social development, economic growth, and climate change [
4]. The 2030 agenda for sustainable development sets out goals to ensure access to affordable, reliable, and sustainable modern energy for all, to double the global energy efficiency, and to promote research and technology for access to clean energy.
Energy poverty emerged initially in the fuel access movement in the UK, which highlighted the inability of households to afford necessary energy services. As economies have developed and time has progressed, energy poverty has come to represent different characteristics in developed and developing countries [
5] and has been given new definitions. Boardman [
6] defines energy poverty as manifested in the inability to pay for adequate energy services, and Hills [
7] defines it as low income and high cost. IEA [
8] put forward the definition of energy poverty from a perspective that is more in line with developing countries, which rely on traditional biofuel for life activities without the ability to obtain and use clean energy, for example, electricity. Based on the Chinese context, Wang et al. [
9] argue that energy poverty must address not only survival needs but also security and development needs, and they construct a comprehensive evaluation index system comprising four dimensions to measure energy poverty.
Energy poverty has emerged as a prominent topic of interest among scholars, who have extensively investigated its economic consequences. Firstly, energy poverty hinders economic poverty eradication and economic development [
2]. Amin et al. [
1] argue that energy poverty and poverty are essentially homologous, that poverty is an important aspect of energy poverty and that the two can be reduced at the same time. Secondly, energy poverty is often associated with numerous social issues, such as education and health [
10,
11]. Energy deprivation affects education and negatively affects the average school year of households [
12]. Households experiencing energy poverty often rely on biofuels (such as wood, coal, dung, and waste) for their household energy needs. However, the combustion process of these fuels is often characterized by low efficiency and poor ventilation, which can have harmful effects on respiratory health. [
13]. Furthermore, some scholars argue that energy poverty affects environmental quality [
9,
14].
With a large population, limited resources, and uneven regional development, China has an obvious problem of low energy use and poor energy use structure. Particularly, in rural areas, more households use traditional biomass as fuel, which affects the health of rural residents as well as ecological degradation [
13,
14]. In response to the energy problems of China, the Chinese government has developed policies to relieve energy poverty, for instance, the utilization of photovoltaic projects to help alleviate poverty; the “1 + N” policy system proposed by the State Council’s Poverty Alleviation Office, which is one document plus a number of supporting policy issue documents. At present, China has solved the problem of electricity difficulty after years of hard work. The effectiveness of energy poverty alleviation is evident and has been affirmed by the Chinese government and people. However, this does not mean the end of poverty alleviation work. On the contrary, there is still a long way to go to consolidate the achievements of poverty alleviation, and higher requirements for energy poverty alleviation are put forward.
To address energy poverty, numerous scholars have explored various possible influencing factors. For example, economic development [
15,
16], electricity penetration [
17], renewable and clean energy [
18], and energy efficiency [
13,
19,
20] all have a positive effect for eradicating energy poverty. Fiscal decentralization refers to the process by which the central government delegates some of its fiscal power to local governments to enhance their autonomy. This can significantly influence local energy utilization. Many scholars have reached an agreement on the conclusion that FD has an impact on energy, but there are contradictions on the impact. Zhang et al. [
21] considered two aspects of the influence of FD on the environment, namely “race to the top” and “race to the bottom”, to examine the nexus between FD and renewable energy. The phenomenon of “race to the top” will improve environmental quality, and this result depends on renewable energy. The “race to the bottom” is exactly the converse. In pursuit of interests, local governments attract more investment in economic activities with a cost of environmental damage, which is raised to a massive use of non-renewable resources, negatively affecting renewable energy consumption [
22]. Elheddad et al. [
23] proposed an inverted U-shaped nexus between FD and energy consumption. Coincidentally, Kassouri [
24] used threshold and quantile regression techniques to test the nexus between FD and renewable energy R&D, and confirmed that the relationship between the two is nonlinear and heterogeneity in the types of FD. At present, the research on the relationship between fiscal decentralization and energy poverty is not rich, and whether fiscal decentralization can play a role in alleviating energy poverty has not been fully revealed, which provides a new research opportunity for this paper to further explore.
Based on the above gaps, this paper examines the impact of FD on energy poverty in a sample of 30 Chinese provinces from 2004 to 2017. This paper studies the impact of fiscal decentralization, industrial upgrading, energy efficiency, technological innovation, and urbanization development on energy poverty. The results show that there is a negative and significant correlation between fiscal decentralization, industrial upgrading, energy efficiency, technological innovation, and energy poverty, while the acceleration of urbanization will increase energy poverty. The fiscal decentralization system will improve the right and autonomy of local governments to deal with energy issues, and at the same time, with a better understanding of the local development situation, local governments will have a more significant effect on addressing energy issues [
24]. Overall, the upgrading of industrial structures and energy efficiency as well as technological innovation will improve the efficiency of resource allocation, at the same time, promote the popularization and use of modern and efficient clean energy [
25]; The acceleration of urbanization will increase the consumption of fossil energy [
26] and hinder the solution of energy poverty. In addition, the heterogeneity test and intermediary test are also applied to further explore the impact of fiscal decentralization on energy poverty under different circumstances and internal mechanisms.
The research contributions and significance of this paper are mainly shown in the following aspects. Firstly, from the perspective of fiscal decentralization, this paper provides new ideas for alleviating energy poverty and enriches the existing literature. This paper analyzes the possible causes of energy poverty, and the possible ways to solve energy poverty from the perspective of government fiscal power. At the same time, it analyzes the potential influencing factors, and enriches the relevant literature in the field of energy poverty. Secondly, based on China’s background, this paper explores ways to alleviate energy poverty, which plays a certain role in promoting China’s energy poverty alleviation work. As one of the most influential developing countries in the world, China has a large population base and unbalanced regional development, which will undoubtedly lead to more severe energy poverty, particularly in the isolated region. Hence, there is an urgent need to study the effect of fiscal decentralization on energy poverty under the background of China. Finally, the present paper explores the differences in the relationship between fiscal decentralization and energy poverty under different circumstances, providing empirical evidence for proposing more specific energy poverty alleviation policies. Through the heterogeneity test, the energy poverty is subdivided into sub-indicators to explore the impact of fiscal decentralization separately, and the differences of the impact of fiscal decentralization on energy poverty under different economic development conditions are explored. In addition, the impact mechanism of fiscal decentralization on energy poverty is analyzed to provide more detailed focus for fiscal decentralization to play its role and provide a basis for more targeted policy suggestions.
The remainder of the present study is structured as below.
Section 2 presents the theoretical framework, data, and econometric methods.
Section 3 denotes the estimation methods and explain the empirical results.
Section 4 is based on further analysis to explore the internal impact mechanism of fiscal decentralization on energy poverty. A discussion on the results is given in
Section 5.
Section 6 discusses the conclusions and policy implications.
4. Further Analysis
Under the pressure of “race to the top”, local governments will be more attracted to environmental protection issues, and have more incentives to improve energy efficiency and technological innovation, reduce energy costs, and reduce basic energy needs. Alberini and Filippini [
46] confirm with a panel dataset of US data that reducing inefficiencies can save around 10% of total energy consumption. Improving energy efficiency is the cheapest and fastest way to meet basic energy needs, allowing residents to consume less energy to achieve the same calorific value, reducing energy demand and thus alleviating energy poverty. Under the fiscal decentralization system, local governments have more initiative and higher power to encourage the development of technological innovation. Technological innovation has advantages in improving energy efficiency, energy cleanliness, and changing the energy consumption structure, which is beneficial in eliminating energy poverty. Technological innovation can not only increase the marginal productivity of energy factors and thus restrain energy demand, but also promote the upgrading of industrial structure, promote the rational distribution of energy factors, realize the intensive utilization of energy factors, and reduce the level of energy consumption.
In the benchmark regression section above, the present study tested the moderate function of TI and EE in the nexus between FD and EP in the form of an interaction term. Here, this research uses the three-step mediation test procedure to further explore the internal impact mechanism of technological innovation and energy efficiency, and set up the following model:
First, for energy efficiency, Model 4, Model 5, and Model 1 (See
Section 2) in the benchmark regression constitute the overall model for examining the indirect effects of energy efficiency. Among them, the coefficient
in Model 4 represents the total effect, and the indirect effect of energy efficiency can only be proved when
in Model 5 and
in Model 1 are both significant. Additionally, the coefficient
in Model 1 represents the direct effect. Similarly, Model 6, Model 7, and Model 1 constitute all models for testing the indirect effect of TI, and the explanations of their coefficients are the same as energy efficiency, which will not be repeated here. The regression outcomes for the above models are listed in
Table 7.
In Model 4 and Model 6, the coefficient of lnFD is significantly negative at the 1% level, demonstrates that FD is negatively impact EP. The coefficients of lnFD in Model 5 and Model 7 are both positive and significant, indicating that FD can promote the increase in EE and TI. In the last column of
Table 7, the lnFD is negatively related to EP, indicating that the direct effect of FD on EP is negative, and the coefficients of lnEE and lnTI are negative and significant. Therefore, the results show that energy efficiency and technological innovation play a mediating role in the nexus between FD and EP, that is, FD increases EE and TI, thereby reducing EP.
5. Discussion
The results of the baseline regression show that there is a negative and significant correlation between fiscal decentralization, industrial upgrading, energy efficiency, and technological innovation, which indicate that these factors are helpful to solve the energy problem. However, the results show that the process of urbanization will promote energy poverty.
Fiscal decentralization is a mechanism to regulate the central and local fiscal power, and plays a decisive role in the efficiency and manner of financial resource allocation [
21]. On the one hand, the increase in fiscal decentralization may mean that the intensification of degree of game between the local government and the central government, which increases the possibility that the local government violates the central environmental protection policy to promote economic development [
47]. On the other hand, the local government may improve the environment quality and increase the use of clean energy through greater fiscal autonomy [
22]. Obviously, the results of this paper support the latter. Moderate fiscal decentralization will improve energy efficiency [
24], promote the development of renewable energy [
21,
48], and also have spatial spillover effect [
49]. This shows that fiscal decentralization will improve the positive attitude of local governments to solve energy problems.
The adjustment of industrial structure plays an important role in reducing energy intensity [
50], which can improve the efficiency of resource allocation and the rationality structure of supply and demand [
25]. The upgrading of industrial structure will lead to changes in energy consumption mode, type, and demand, thus alleviating energy poverty. Inefficient energy policies will exacerbate energy poverty [
20]. Improving energy efficiency can reduce energy demand and consume less energy at the same calorific value [
46]. Energy efficiency is an important measure to improve energy poverty and will further effectively improve the welfare of residents [
51]. Technology innovation can improve the energy consumption structure, reduce the energy consumption per unit output, and energy consumption intensity [
52], thus have a positive impact on the elimination of energy poverty. Wang et al. [
53] and Lee et al. [
54] proposed that renewable energy technology innovation has a positive role in the expansion of renewable energy production and the reduction of costs, thus improving the opportunities for residents to obtain and consume renewable energy and helping to address the energy poverty problem. The acceleration of urbanization, on the one hand, will be accompanied by the increase in population; on the other hand, it will increase the demand for urban infrastructure [
55], and both of them will increase the use of energy, especially fossil fuel energy [
26], which will affect the energy structure and energy, and further aggravate energy poverty.
The results of the heterogeneity test show that fiscal decentralization has an impact on all the four sub-indicators of energy poverty, but the specific effects are different. On the one hand, the decentralization of fiscal power will improve the availability of energy services, energy infrastructure construction, and energy efficiency. The increased autonomy of local governments will enhance the sense of responsibility, strengthen the importance of basic services, and increase the income of residents [
56], thus improving the use of energy by residents. On the other hand, the relationship between fiscal decentralization and the cleanliness of energy consumption is positive, which indicates that the local governments promote economic development mainly by consuming fossil energy, which is similar to the conclusion of [
47]. Consequences of the mechanism test show that technological innovation and energy efficiency are the paths in fiscal decentralization affecting energy poverty. The results of the comprehensive heterogeneity test and mechanism test show that the local government has increased its awareness of reducing energy poverty after the increase in fiscal autonomy, improved the opportunities available to residents for energy services, and tried to achieve this by improving technological innovation and energy efficiency. However, local governments still insist on using non-clean energy to improve local economic development. In a word, the results of the heterogeneity test and mechanism test comprehensively show that the local government has increased its awareness of reducing energy poverty after increasing its fiscal autonomy and improved the opportunities available to residents for energy services by improving technological innovation and energy efficiency. However, local governments still insist on using non-clean energy to improve local economic development.
6. Conclusions
Using the data from 30 provinces from 2004 to 2017, this paper explores the effects of fiscal decentralization, industrial structure upgrading, energy efficiency, technological innovation, and urbanization on energy poverty.
The study has obtained some interesting results through econometric methods. Firstly, the results in the benchmark regression show that fiscal decentralization can significantly reduce energy poverty, and the relationship between industrial upgrading, energy efficiency, technological innovation, and energy poverty is negatively significant, but urbanization is positively and significantly related to energy poverty. Secondly, this paper examines the moderating effects of energy efficiency and technological innovation in the form of interaction terms. The consequences demonstrate that energy efficiency and technological innovation are essential elements in reducing energy poverty. In addition, the current study divides energy poverty into four sub-indicators, and the results represent that fiscal decentralization is helpful in increasing residents’ access to clean energy and promoting energy management agencies and energy infrastructure. However, fiscal decentralization has not played a role in increasing the cleanliness of energy consumption. In a differentiated economic development level, the impact of fiscal decentralization on energy poverty is different. Finally, this paper explores the mediating effect of energy efficiency and technological innovation using a three-step method, which further confirms the indirect effect of energy efficiency and technological innovation.
Based on the results of this paper, several policy implications are offered for eliminating energy poverty.
Firstly, the focus needs to be on energy-poor areas and implementing targeted energy poverty alleviation policies. Energy poverty and economic poverty are not synchronized, so the poverty situation in each region needs to be accurately identified. The heterogeneity of the development between regions and the geographical environment ought to be noticed, and the matter of energy poverty should be settled according to local conditions. For example, photovoltaic power generation can be developed in areas with sufficient sunlight, and hydropower can be used in areas rich in water resources. To settle the matter of energy poverty thoroughly, a one-size-fits-all policy cannot be adopted. Local governments need to consider local characteristics and advantages to carry out targeted energy poverty alleviation.
Second, delegating rights to lower levels of governments will alleviate environmental degradation and energy poverty. Thus, it is extremely vital to reasonably divide the rights and responsibilities of local and central governments in energy poverty alleviation, further optimizing the fiscal expenditure structure of local government and improving the efficiency of energy poverty alleviation.
Third, according to the research results, energy efficiency and technological innovation are essential elements in reducing energy poverty and also are essential paths to help fiscal decentralization reduce energy poverty, the enlightenment is that we ought to take advantage of the positive role of technological innovation and energy efficiency in energy poverty alleviation, accelerate industrial technology upgrading and reduce energy consumption. In addition, when formulating energy poverty reduction policies, it is not only necessary to vigorously develop the regional economy, optimize energy infrastructure, and enhance energy utilization efficiency, but also to consider the resource shortage caused by the accelerating urbanization process, and replace traditional fossil fuels with clean energy.
The limitations of this paper are as follows. Firstly, only the impact on energy poverty from the aspects of fiscal decentralization, industrial upgrading, energy efficiency, technological innovation, and urbanization are discussed. However, energy poverty has multiple dimensions. In the future, it is necessary to further explore other indicators affecting energy poverty and their impact mechanisms, such as regional energy policies, education level, and living habits of resident. Secondly, limited by the availability of data, only 30 provinces from 2004 to 2017 were selected, and only taking the province as the research unit, the spatial scale is large, which reduces the practical significance of the research conclusions. In the future, the research scale can be reduced to the county or city level to further study the origin and influencing factors of energy poverty.