Analyzing nonlinear and asymmetric effects of green finance and renewable energy on energy efficiency amidst technological innovation in E7 countries

Abstract

The study aims to explore the relationship between green funding, green energy, and energy efficiency in E7 countries, guided by the SDG-7 guidelines recommended by the United Nations General Assembly. Methodologically, the study employs the Nonlinear Autoregressive Distributed Lag (NARDL) and Two-Stage Least Squares (2SLS) techniques on data collected between 1988 and 2022. The rationale for this approach lies in its ability to capture both short-term and long-term dynamics in the relationship between green funding, green energy, and energy efficiency. Analysis of the data reveals varying stages of green funding growth among E7 countries, with China (1.52), Brazil (1.44), India (1.35), Indonesia (1.94), Mexico (1.73), and Russia (1.93) exhibiting different levels of progress. Russia and Turkey are identified as having the highest Gini coefficients in 2019, indicating disparities in green funding distribution within these countries. The empirical findings underscore the critical role of investment in the energy sector by both corporations and the public sector to enhance access to electricity, bolster energy security, and foster environmentally sustainable economic development. However, the study identifies insufficient investment as a fundamental obstacle hindering progress in green energy efficiency in E7 nations. Despite the potential for implementing energy efficiency measures and renewable energy sources in E7 countries, the future remains uncertain due to existing obstacles in green financing and regulatory frameworks. Consequently, the paper emphasizes the imperative of addressing these obstacles to unlock the full funding potential for energy efficiency initiatives in E7 nations.