Race and energy poverty: The moderating role of subsidies in South Africa

Although energy poverty has recently gained wider attention, fewer efforts have been made to understand the race-energy poverty nexus, especially for developing economies. To contribute to the literature, our study analyzes the effect of race on multidimensional energy poverty while accounting for the moderating role of subsidies by utilizing the South African General Household Survey. The estimates show that Non-Whites, predominately Blacks are susceptible to energy poverty and experience about 11.5% energy poverty prevalence than their White counterparts. The result is consistent when other robust methods are applied. This difference is attributed to the level of discrimination Non-Whites face, as confirmed by the Oaxaca-Blinder decomposition analysis. The decomposition analysis further showed that compensating Non-Whites would reduce their energy poverty prevalence by 17%. More so, the moderation analysis shows that the free basic electricity and social housing subsidies received by Non-Whites are generally ineffective in reducing their energy deprivation. Therefore, we urge policymakers to put measures in place to end the discrimination that comes with the allocation of subsidies, to facilitate the adoption of clean energy services among Non-Whites and eradicate energy poverty.