Clean Heating, Building Energy Retrofits, and Rural Energy Poverty: Policy Synergy in Northeast China

• In Event: Clean Energy Transitions in Developing and Rural Contexts

Abstract

Introduction: Against the backdrop of China’s carbon neutrality agenda, clean heating policies in northern rural regions have given rise to a fundamental tension between emissions reduction imperatives and household energy affordability. Northeast China, characterized by prolonged, severe winters, poorly insulated residential stock, and persistently low household incomes, represents a particularly salient and policy-relevant test case. Escalating energy costs, low household willingness to pay (WTP) for clean energy, and widespread reversion to coal combustion have severely undermined the efficacy and long-term sustainability of these policies. This study addresses three interrelated research questions: Does clean heating adoption increase household energy expenditures and exacerbate energy poverty? Can building energy retrofits offset this additional cost burden? Does coordinated implementation of both policies deliver simultaneous environmental and welfare gains?

Research Design and Methods: The empirical analysis draws on original household survey data collected in 2023 from 606 rural households across Heilongjiang, Jilin, and Liaoning provinces. We operationalize three distinct sets of outcome variables: (1) cost outcomes; (2) energy burden ratio and a binary energy poverty indicator; and (3) behavioral outcomes—stated WTP for clean energy and a binary indicator for coal reversion. First, we employ a 2×2 factorial analysis of variance (ANOVA) to preliminarily test for the main effects of each policy and their interaction effect on per-square-meter heating costs. Second, we estimate baseline treatment effects using multiple linear regression models. Third, we further explore heterogeneous treatment effects across household income quintiles, geographic regions, dwelling characteristics, and different clean heating technology pathways.

Results:
Policy Synergy. For heating costs, the interaction term between clean heating participation and building retrofits is negative and statistically significant, and its magnitude exceeds the positive main effect of clean heating alone.
Energy Poverty. Participation in clean heating programs is associated with statistically significant increases heating costs, even after controlling for all levels of government subsidies. Clean heating adoption significantly increases both the average household energy burden ratio and the likelihood of experiencing energy poverty. Clean heating implementation is associated with a statistically significant decline in households’ stated WTP for clean energy.
Coal Reversion. Counterintuitively, building energy retrofits are positively associated with reversion to coal heating, even among households that have already installed clean heating systems. Subgroup analysis further shows that the probability of coal reversion is highest among households that received building retrofits.

Implications:First, clean heating programs and building energy retrofits should be implemented as an integrated package rather than separate initiatives, with retrofits serving as a necessary prerequisite to fully capture their cost-offsetting synergies. Second, policymakers must prioritize addressing the distributional impacts of clean heating policies, particularly the elevated risk of energy poverty among low-income households and residents of older, poorly insulated dwellings. Third, long-term and multi-faceted incentive mechanisms are essential. These should include optimizing subsidy structures, improving clean energy technology efficiency, and reducing both upfront and operating costs. Such measures can help break the persistent path dependence on coal heating, thereby supporting a more sustainable rural energy transition.

Authors

• Haowen Dong, Harbin Institute of Technology
  Presenting Author

• Jing Liang, Harbin Institute of Technology
  Non-Presenting Co-Author