Work

Stringent climate policies and energy poverty: Evidence of spatial spillovers and challenges for a just transition

Year: 2026

Type: article

Abstract: Stringent climate policies (SCPs) are central to decarbonization, yet their distributive impacts on energy poverty (EP) and regional inequality remain contentious, especially under growing fragmentation and weaker policy coordination. This study investigates the impact of SCPs on EP in China, examining heterogeneity across policy instruments, mechanisms, and spatial contexts. Using more than 7000 subnational policies from 2007 to 2022, we construct a text-based SCP index and apply fixed-effects and spatial econometric models. The results show that SCPs are consistently associated with lower EP, with command-and-control instruments exhibiting particularly strong effects, partly through industrial upgrading. However, once spatial dependence is considered, the effects become more uneven: Spatial Durbin Models show that SCPs reduce EP within implementing provinces but increase EP pressure in neighbouring regions. Further evidence from polluting-firm entry suggests that stricter SCPs may discourage polluting activities locally while increasing their relative entry in nearby provinces, helping to explain the observed beggar-thy-neighbour pattern. Spatial effect decomposition shows that local gains are largely offset by cross-border spillovers, leading to a small and statistically insignificant total effect. We conclude that climate policy design should account for spatial externalities and regional burden sharing to ensure a just transition across regions.

Source: Energy Policy

DOI: 10.1016/j.enpol.2026.115590

Authors: Tingting Bai, Gissell Huaccha

Institutions: Yangzhou University, University of Leeds

Language: English

Topic: Climate Change Policy and Economics

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences