Green Growth’s Unintended Burden: The Distributional and Well-Being Impacts of China’s Energy Transition

Abstract

Achieving environmentally sustainable growth is a core challenge for developing economies, yet the welfare consequences of green development policies for vulnerable populations remain understudied. This article investigates the distributional impacts of one of the world’s largest development interventions: China’s energy transition. By integrating provincial-level energy metrics with a decade-long household panel survey (CFPS), we employ a fixed-effects model to provide a holistic assessment of the policy’s effects on household well-being. The analysis reveals a stark trade-off: a 10% increase in clean energy adoption generates significant non-monetary well-being gains, equivalent to a 190,000 CNY annual income rise, primarily through improved environmental quality and cleaner cooking fuel access. However, these benefits are partially offset by rising energy costs. Our heterogeneity analysis reveals a clear regressive burden: the transition significantly increases energy expenditures for rural and low-income households, while having a negligible or even cost-reducing effect on their urban and high-income counterparts. Our findings demonstrate that while the energy transition promotes aggregate welfare, its benefits are unevenly distributed, potentially exacerbating energy poverty and inequality. This underscores a critical development challenge: green growth is not automatically inclusive. We argue that for the energy transition to be truly pro-poor, it must be accompanied by robust social protection mechanisms, such as targeted subsidies, to shield the most vulnerable from the adverse economic shocks of the policy.