Climate change poses a significant threat to global sustainability, prompting widespread implementation of climate policies aimed at controlling greenhouse gas emissions. These policies, primarily focused on reducing fossil fuel consumption, have potential spillover effects on other energy-related issues, notably energy poverty, a key component of the UN Sustainable Development Goals (SDGs). This research examines whether a positive spillover exists from climate actions to energy poverty reduction. The study adopts a cross-country approach using data from 75 nations between 2000 and 2020. The primary contribution lies in analyzing the cumulative effect of various climate policies, rather than focusing on individual policies, allowing for broader conclusions about policy spillover effects and exploring differences across policy types. This research intends to provide evidence for policymakers to evaluate the potential synergies between climate actions and broader sustainable development goals. The core objective of climate change policies is to control GHG emissions, primarily from fossil fuel use. Transitioning to sustainable energy systems and renewable energy sources is essential, but this transition presents challenges related to justice and equity. The impacts of climate change policies are multi-dimensional, influencing sustainable development, health, the financial sector, and other global aspects. Some studies suggest climate policies can influence energy poverty, which affects a significant portion of the global population lacking access to modern energy or its affordability. The key question addressed is how climate change policies might affect energy poverty – potentially by supporting renewable energy development, improving energy efficiency, or providing climate finance for energy system improvements. However, poorly designed climate policies could also worsen energy poverty through price increases. Existing research offers inconsistent conclusions on the overall impact of climate change policies on energy poverty. This paper aims to resolve these inconsistencies by comprehensively analyzing the spillover effects of climate actions on energy poverty reduction across various policy types and across developed and developing nations.

The concept of energy poverty has evolved from focusing on insufficient energy consumption relative to income to incorporating energy access. Multi-dimensional energy poverty indices exist but often rely on micro-level data, limiting their application to a smaller number of countries. This study uses the Energy Development Index (EDI), which encompasses total primary energy use per capita, renewable energy consumption, electric power consumption per capita, and electricity access, to measure energy poverty at the national level. Studies examining the impact of climate policies on energy poverty highlight the potential for both positive and negative effects. Some argue that poorly designed policies can exacerbate energy poverty through price increases, while others suggest that well-designed policies can lead to positive impacts through renewable energy development, energy efficiency improvements, and climate finance. Existing research, however, presents inconsistent findings regarding the overall effect of climate policies on energy poverty. This study contributes to this literature by considering the combined effects of various climate policy types and accounting for the differing contexts of developed and developing countries.

This study employs panel fixed-effect models using annual data from 75 countries between 2000 and 2020. The dependent variable is the Energy Development Index (EDI), a multi-dimensional measure of energy poverty. The main independent variable is the stock of climate change policies, categorized by legislative and executive levels, short-term and long-term implementation, and policy type (regulations and strategies). Control variables include log per capita GDP, openness, industrial structure (service sector share), urbanization level, labor force participation rate, age dependency ratio, and abnormal temperature. The baseline model is specified as: EDI_it = α + β CP_i,t-1 + γ X_i,t-1 + θ_i + η_t + ε_it, where EDI_it is the EDI for country *i* at year *t*, CP_i,t-1 is the lagged measure of climate change policies, X_i,t-1 is the vector of control variables, θ_i represents country fixed effects, η_t represents year fixed effects, and ε_it is the error term. Additional models examine the effects of different categories of climate policies (legislative vs. executive, short-term vs. long-term, regulations vs. strategies). Data for the EDI is calculated based on World Bank's World Development Indicators, and data for climate policies is sourced from the "Climate Change Laws of the World" dataset. Descriptive statistics, correlation analysis, and counterfactual analysis are also performed. To address endogeneity concerns, a two-stage least squares (2SLS) approach using the Red List Index (measuring biodiversity loss risk) as an instrument for climate policies is implemented. Furthermore, the study explores potential mechanisms through which climate policies affect energy poverty by including variables for natural resource rents, renewable energy share, and innovation.

The study finds strong evidence of a positive spillover effect from climate policies to energy poverty reduction. More climate policies are significantly associated with higher EDI scores (lower energy poverty). However, the impact varies depending on the type of policy: * **Legislative policies:** Show significantly stronger positive effects on EDI compared to executive policies. This suggests that legislated policies are more effective in promoting energy development. * **Long-term policies:** Exhibit stronger positive effects than short-term policies, indicating that the benefits of climate action take time to materialize. * **Regulations:** Have a negative impact on EDI, possibly due to increased energy costs. * **Strategic policies:** Demonstrate a significant positive impact on EDI, reflecting the positive influence of strategies focusing on renewable energy development and infrastructure improvements. * **Developed vs. Developing Countries:** The spillover effect is stronger for developing countries, likely due to the comparatively larger marginal impact of increased policy actions in countries with initially lower EDI scores. Regulations show a more significant negative effect on EDI for developed countries. Analysis of potential mechanisms revealed that climate policies positively impact energy development by increasing natural resource rents, enhancing the share of renewable energy in the electricity mix, and promoting innovation. These channels were empirically supported. The 2SLS robustness check, using the Red List Index as an instrument, confirmed the main findings, indicating that the positive relationship between climate policies and EDI is not spurious. Counterfactual analysis shows a growing gap in EDI scores over time between a scenario with climate policies and a scenario without climate policies, highlighting the significant positive impact of climate actions on energy development.

The findings strongly support the existence of positive spillovers from climate actions to energy poverty reduction. The heterogeneity in the effects of different types of policies suggests that a well-designed policy mix is crucial for maximizing the benefits and minimizing the unintended negative consequences. The stronger impact observed in developing countries highlights the importance of tailored climate policies that address the specific energy poverty challenges faced in these regions. The identified mechanisms (increased natural resource rents, renewable energy share, and innovation) provide insights into the pathways through which climate policies contribute to alleviating energy poverty. The robustness checks solidify the confidence in these findings and contribute to the ongoing debate on the interconnectedness of sustainable development goals.

This study provides robust evidence of positive policy spillovers from climate actions to energy poverty reduction. Policymakers should prioritize climate policies, particularly those enacted through legislation and focused on long-term strategic goals, to achieve simultaneous climate and development objectives. The stronger impacts in developing countries emphasize the need for targeted support and international cooperation to address energy poverty within the context of climate change mitigation. Future research could explore these relationships at a micro-level, incorporating household-level data to gain further insights into the distributional effects of climate policies.

The study's limitations include the use of national-level data, which limits the analysis of heterogeneity within countries. The relatively short time-series dimension of the data may also limit the accuracy of dynamic analyses. Future studies could address these limitations by incorporating micro-level data and potentially extending the time frame of the analysis.