Renewable energy in prism of technological innovation and economic uncertainty

Abstract

This research unveils the effect of economic policy uncertainty on renewable energy in G7 while technological innovation is used as a control variable by employing a quantile on quantile approach. The outcome explores the negative effect of economic policy uncertainty on renewable energy across all quantiles. Moreover, the relationship is detected mostly in upper quantiles and the coefficients reveal varying effects. Furthermore, the negative impact of economic policy uncertainty on renewable energy and vice versa is recorded in Canada, France, Germany, the UK, and the U.S. On the other hand, Italy and Japan record negative effects of economic policy uncertainty on renewable energy in the medium to upper quantiles, and a positive impact is observed from renewable energy to economic policy uncertainty in higher to lower quantiles. The positive impact of technological innovation on renewable energy is detected in the medium quantiles for all the G7 countries. Our results are in line with the general equilibrium model (GEM) that explains the negative influence of economic policy uncertainty on renewable energy development and vice versa. The government policy and regulatory framework consistency are paramount in renewable development.