Impact of business cycles on energy poverty: Exploring the significance with sustainable development goals in newly industrialized economies

Rizwana Yasmeen and Wasi Ul Hassan Shah

Applied Energy, 2025, vol. 378, issue PA, No S0306261924021603

Abstract: Energy poverty is a key barrier to achieving SDG 7, which targets full access to affordable and sustainable energy by 2030. Thus, the study utilized the Complementary Percentage Method to track the energy poverty rate in electricity and clean fuel energy for rural and urban areas in NICs from (2000−2021). Subsequently, the study expanded to examine the impact of business cycles on energy poverty in NIC economies. Christiano-Fitzgerald filter and Hodrick-Prescott filter are used to measure the business cycle phases. The findings show that though most NICs have achieved full electricity access, significant disparities remain, particularly in rural areas where millions still lack access to both electricity and clean cooking fuels. Using System-GMM and IV-GMM, the study finds that business cycles, especially recessions, worsen energy poverty in NICs. Economic expansion cycles positively impact energy access and reduce energy poverty. Innovations and investments in the energy sector emerge as positive influencers in alleviating energy poverty. Also, the business cycle reduced renewable energy consumption. Findings indicate that countries with strong governance, effective regulation, rule of law, and control of corruption measures are more successful in reducing energy poverty. The additional transmission estimators reaffirmed findings; income inequality, energy intensity, unemployment and GDP per capita support the outcomes of business cycles' benchmark model. These findings highlight the need for investment in energy infrastructure and targeted policies to close the rural-urban energy gap, particularly for clean cooking fuels, to meet SDGs7.

Keywords: Business cycles; Electric & Clean fuel energy poverty; Rural & Urban energy poverty; Economic recessions & booms; SDGs-7 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1016/j.apenergy.2024.124777

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