How do high-tech industry, energy efficiency (gas and oil), and social globalization affect load capacity factor in Saudi Arabia? A Time-varying quantile regression

Abstract

The significant allure of widely available fossil energy sources at a reasonable cost engenders formidable impediments to the transition toward renewable energy sources in Saudi Arabia, one of the world's foremost energy-producing nations. Mitigating the escalating levels of emissions and addressing the substantial ecological deficits requires a comprehensive investigation of the prospective contributions of energy efficiency and high-tech industry as integral components in the strategic response to environmental challenges. In light of this, our current study employs quarterly data spanning from 1990 to 2021 and introduces an innovative approach known as time-varying quantile regression (TVQR), which has not been previously utilized in the existing literature. We complement this with time-varying nonparametric quantile causality to assess the impacts of disaggregated energy efficiency, the high-tech industry, and social globalization on ecological quality (proxied by load capacity factor (LF)) across different quantiles and time intervals in Saudi Arabia. Our TVQR analysis reveals that both the high-tech industry and oil and gas efficiency have a positive impact on environmental quality, as evidenced by their ability to enhance the LF indicator across a significant portion of quantiles and time intervals. Conversely, economic growth and social globalization have a negative impact on environmental quality. Additionally, the selected explanatory variables exhibit significant predictive power over LF across various time frames and quantiles. Lastly, we have formulated a comprehensive policy framework aimed at enhancing ecological quality.