The Determinants of Renewable Energy Production– A Global Study on Panel Data

Abstract

Objective: Due to the environmental concerns as a result of the utilization of dirty fuel, globally the nations are actively pursuing the transition toward Renewable Energy (RE). Therefore, to mitigate the CO₂ emissions and address the energy security, the deployment of RE is the ultimate solution, hence identifying the drivers of RE is imperative.

Research Gap: However, the focus of the earlier studies was on the determinants of RE consumption (REC) whereas the focus of this study is on the determinants of RE production (REP). The REP represents the supply side of economics and excludes the energy import, transmission and distribution losses

Design/Methodology/Approach:. The study is based on global panel data of 133 countries from 1990 to 2020 and applies panel data estimation techniques.

The Main Findings: The study revealed that economic variables such as GDP per capita and trade openness, as well as demographic (urban population), drive the REP. Conversely, energy-related variables, i.e., electricity generation from coal, oil, natural gas and nuclear sources slow down the adoption of RE. Similarly, the relationship between REP and CO₂ emissions per capita, used as a proxy for the environment is negative, which is interesting and it can inferred that the lobby elements for favoring the utilization of fossil fuel bars the deployment of RE.

Theoretical / Practical Implications of the Findings: This study is helpful for policymakers and researchers in understanding the dynamics of the determinants and making an informed decision while devising energy policies.