Does the disparity between rural and urban incomes affect rural energy poverty?

The persistent disparity between urban and rural incomes in China poses a critical challenge to alleviating energy poverty in rural areas. This study investigates how the income gap between urban and rural regions exacerbates rural energy poverty, focusing on the period from 2005 to 2023, utilizing data from 30 provinces. By employing a two-way fixed-effects model and asymmetry analysis, the research reveals that an increase in the urban-rural income disparity significantly intensifies rural energy poverty. Notably, at higher income quantiles, the gap's effect on energy poverty is more pronounced, while at lower quantiles, its impact is less severe. Financial development, rather than alleviating the situation, is positively associated with rural energy poverty, highlighting an unintended consequence of unequal access to financial services. The results further show that rural regions with limited financial inclusion experience a deepening of energy poverty, with financial service accessibility benefiting wealthier demographics more than the impoverished rural population. These findings imply that targeted policies promoting equitable financial access, narrowing income disparities, and integrating energy poverty reduction strategies are essential to achieving China's Rural Revitalization Strategy. • Urban-rural income gap worsens rural energy poverty from 2005 to 2023 in China. • Higher income quantiles face a more pronounced effect on rural energy poverty. • Financial development unintentionally increases rural energy poverty in China. • Equitable financial access and reduced income gaps are key for energy poverty reduction.