Interplay Between Residential Clean Energy and Climate Policies in India: Distributional Consequences

Climate policy affects households not only through aggregate emissions reductions but also through its interaction with sector-specific policies that shape exposure and economic outcomes. In this study, we use causal forests to estimate heterogeneous effects of residential energy technologies on sick days and sickness-related work absences, out-of-pocket health expenditures, and lost earnings using nationally representative individual-level data from the India Human Development Survey. We combine these with projections of ambient PM2.5 from GAINS to simulate outcomes through 2030 under alternative climate and residential clean energy policies. We find that under current climate policies, reductions are modest, whereas more stringent, but feasible climate policies, combined with a full transition to clean fuels in the residential sector, produce considerably larger reductions, with routinely disadvantaged individuals benefiting the most. The results highlight the importance of complementing climate and residential clean energy policies to enhance both the magnitude and the distributional reach of economic benefits.