Assessing the role of the insurance market and renewable energy in the load capacity factor of OECD countries.

Abstract

In the empirical literature, few studies assessed the influence of the insurance market on carbon emissions. However, the effects of insurance markets on the load capacity factor (LCF) have been ignored. In this regard, the objective of the current work is to assess the potential impact of the insurance market on environmental sustainability in 27 OECD countries from 1990 to 2018 based on the LCF, which implies the strength of a state to enhance the population based on the current lifestyle. The present work employed the novel Method of Moments Quantile Regression (MMQR). This model is the prime and correct technique to better understand the association between the insurance market and the LCF across heterogeneous quantiles and to yield more robust empirical outcomes. The MMQR findings indicate a negative interaction between the insurance market and the LCF. In other words, the insurance sector has a powerful influence on economic activities and investments, such that insurance activities lead to an increase in the level of energy utilization, and thus have a negative influence on ecological sustainability. In contrast, the findings illustrate a positive and considerable association between renewable energy consumption and LCF. Based on the overall outcomes, it is suggested that OECD countries should focus on policies that encourage the use of renewable energy rather than incentivizing the insurance market. OECD country governments should also support green insurance activities to minimize the environmental damage of the insurance market.