The window of opportunity: Estimating the role of climate finance on urban-rural electricity inequality

Access to electricity is vital for enhancing human welfare; however, it is not equally distributed between rural and urban demographics. This paper, for the first time, examine the impact of climate finance on electricity accessibility, and the inequality of electricity accessibility between urban and rural areas. Based on the dataset covering 125 countries during 2002-2020, and by using the instrumental Variables-Generalized Method of Moments model, we mainly arrive at the following conclusions. (1) Climate finance emerges as a beneficial factor for enhancing electricity accessibility, and it also demonstrates a pronounced impact on reducing urban-rural electricity inequality. (2) Climate finance is more effective in low-income countries; however, its impact diminishes progressively as countries move towards higher income levels. (3) The human development index enhances the promoting effect of climate finance on electricity accessibility. It simultaneously strengthens climate finance's inhibiting effect on electricity inequality. While the presence of refugee populations reverses the initial positive effects of climate finance on electricity accessibility, and exacerbates the inhibiting effect of climate finance on electricity inequality.