Remittance Inflows and Energy Transition of the Residential Sector in Developing Countries

Abstract

The energy transition is crucial for the United Nations’ Sustainable Development Goal 7 (affordable and clean energy). As remittances account for a significant share of household incomes in developing countries, they may be associated with the energy transition from low-efficiency residential fuels (e.g., coal and wood) to high-efficiency residential fuels (e.g., gas and electricity). This study examines the association between remittances and residential energy transition in developing countries by employing a pooled mean group autoregressive distributed lag (PMG-ARDL) model for 27 developing nations from 1995 to 2018. The results indicate that a 1% increase in remittances (ratio to GDP) is associated with a 0.24% increase in the share of high-efficiency energy sources in residential energy consumption in the long run.