Impacts of bilateral trade on energy affordability and accessibility across Europe: Does economic globalization reduce energy poverty?

Abstract

Energy poverty is a major issue in both developing and developed countries, and its mitigation is a key aspect of the United Nations’ Sustainable Development Goals (SDGs). However, the determinants of energy poverty are relatively less explored. The current research adds to the scholarly literature on energy affordability and accessibility for the lowest 20% poor European population. This is one of the first studies to examine the impact of bilateral trade, globalization, and bureaucratic quality on energy poverty. A variety of robust panel data techniques were used to investigate the role of bilateral trade for energy poverty, which includes cross-sectional autoregressive distributed lag (CS-ARDL), common correlated effects generalized method of moments (CCE-GMM), and instrumental variable regression. This study employs annual data (from 2000 to 2019) from 27 European countries. The econometric findings revealed that bilateral trade increases energy accessibility and causes energy prices to upsurge. Economic globalization was determined to increase energy expenses and reduce access to fuel for the poorest people in Europe. In the future, bilateral trade should be reviewed to ensure the following criteria. All European countries receive maximum benefit from it; low-income countries should be supported; and environmental harm should be minimized. These empirical findings are robust across model settings, enabling us to suggest novel conclusions on energy accessibility and affordability in accordance with the SDGs.