Environmental tax and energy poverty: An economic approach for an environmental and social solution

Energy poverty remains a major challenge for sustainable development, especially for well-being in developing countries. In addition to the energy challenge, international and national authorities are increasingly concerned about the environment. Every day, we have to think about how to preserve the environment, hence the environmental tax adopted by several countries around the world. To date, few studies have analysed the effect of environmental taxes on energy poverty, particularly in developing countries. Consequently, the aim of this study is to analyse the effect that the adoption of environmental taxes can have on energy poverty (measured mainly by access to clean cooking energy) in a panel of 52 developing countries over the period from 1995 to 2020. In addition, this study examines the transmission channels through which the environmental tax affects energy poverty. Empirical evidence from the use of estimation techniques such as fixed effect and Driscoll-Kraay reveals that the environmental tax has a positive and significant effect on access to clean cooking energy for both the total population and for urban and rural populations. In addition, this study identifies various channels through which the environmental tax contributes to improving access to clean cooking energy, such as renewable energy consumption, income inequality, employment in industry and CO2 intensity. These results highlight the important role of the tax in achieving sustainable development objectives, particularly access to clean cooking energy in developing countries.