Cash transfers and the Han-Minority household energy poverty gap in rural China

This paper investigates the impact of cash transfers from China's national minimum income program on multidimensional household energy poverty in rural China. A fuzzy regression discontinuity (FRD) design is applied to a unique, representative sample of ethnically diverse households from China's underdeveloped inland areas. The paper first presents descriptive evidence revealing, for the first time, a significant ethnic-based energy poverty gap between Han and ethnic minority households. The FRD analysis shows that cash transfers significantly reduce energy poverty, particularly among ethnic minorities, thereby narrowing this gap. The findings are explained by the concept of fuel stacking: as household income increases through cash transfers, beneficiaries shift from reliance on biomass to investing in modern energy sources, meeting higher energy demands and improving health. These results indicate that cash transfer programs are effective not only in reducing energy poverty but also in promoting a more equitable energy transition.