Renewable Energy, Innovation and Adaptation to Climate Change: Evidence from Europe and Central Asia

This paper investigates the moderating role of governance quality on the finance-renewable energy-growth nexus in five major regions in the world, including 123 countries from 1990 to 2017. These regions concern the Asia Pacific, Europe & Central Asia, America (North America and Latin America & Caribbean), Middle-East and North Africa (MENA), and Sub-Saharan African (SSA) regions. Following the principal component analysis (PCA), we constructed composite indexes of governance quality and financial development using six institutional indicators and eight financial variables. Next, we applied the two-stage least squares, difference-GMM, and system-GMM methods, as well as the Granger non-causality test in Dumitrescu and Hurlin (2012). First, the results show that better governance quality wipes out the harmful effects of financial development and renewable energy consumption on economic growth in the Asia Pacific, MENA, and SSA regions, respectively. Conversely, the level of governance quality reduces the positive effects of financial development and renewable energy consumption on economic growth in America, with few exceptions in Europe & Central Asia region, respectively. Second, we find marginal adverse effects of financial development and renewable energy consumption on growth in the Asia Pacific, MENA, and SSA regions due to their low levels of governance quality. However, the marginal effect of renewable energy consumption on growth is positive in America and Europe& Central Asia regions, whereas the marginal effect of financial development is negative in these regions in most cases. Third, there is bidirectional causality between financial development and economic growth in all areas, whereas the bidirectional causality between renewable energy consumption and growth is only confirmed in America and SSA regions, respectively. This study reveals the threshold effect of governance quality on the renewable energy-finance-growth nexus across regions. Thus, financial development, renewable energy consumption, and governance quality are complementary factors to enhance economic growth in the Asia Pacific, MENA and SSA regions, contrary to America and Europe & Central Asia regions, with some exceptions. Therefore, policymakers should improve the level of governance quality, the efficiency of financial systems and renewable energy consumption to promote sustainable development in the different regions, especially in the Asia Pacific, MENA, and SSA regions.

This study examines the effects of renewable and non-renewable energy consumption and economic growth on CO2 emissions for 53 developing countries during the period 1990-2014. For this purpose, the study employs a two-step difference Generalized Method of Moments (GMM) approach. Empirical results show that there is an inverted U-shaped relationship between economic growth and CO2 emissions, which shows the validity of the environmental Kuznets curve (EKC) hypothesis. The effect of renewable energy consumption (REC) on CO2 emissions was found to be negative and significant, while the effect of non-renewable energy consumption (NREC) was positive and significant. Moreover, both renewable and non-renewable energy consumption positively affect economic growth. Thus, for developing countries aiming to reduce CO2 emissions and the consequent environmental pollution, it is necessary to reduce the share of NREC in total energy consumption and to increase the share of REC. Furthermore, because NREC positively affects economic growth, the efficiency of non-renewable energy resources should be increased in order not to damage the economic growth process while decreasing the use.

Foreign direct investment and renewable energy in climate change mitigation: Does governance matter?

Geleneksel enerji kaynaklarının çevreye ve sağlığa olan zararlı etkilerinden dolayı son dönemde yenilenebilir enerji kaynaklarının tüketimi dünya gündeminde ön plana çıkmıştır. Ülke ekonomilerinin varlığını sürdürebilmesi için bireylerin sağlık ve refahını sağlaması gerekmektedir. Bu bağlamda ülkelerin öncelikli görevi halk sağlığını korumak ve sürdürülebilirliğini sağlamak olmalıdır. Bir ülkenin sağlık harcamaları düzeyini belirleyen pek çok unsur vardır; çevre koşulları da bunlardan biridir. Yenilenemeyen enerji kaynaklarının tüketiminden kaynaklanan sera gazı emisyonlarındaki artış, insan refahı ve çevre için büyük tehlike oluşturabilmektedir. Sera gazı emisyonlarının neden olduğu çevre sorunları, sinir sistemini, akciğerleri etkilemek, solunum yolu hastalıklarına neden olmak gibi birçok açıdan insan sağlığını olumsuz etkilemektedir. Ayrıca sera gazı emisyonlarından kaynaklanan çevre kirliliği sağlık harcamalarını arttırmakta ve iş gücü verimliliğinin azalmasına sebep olmaktadır. Bu olumsuz etkiler göz önüne alındığında yenilenebilir enerji kaynaklarından olan rüzgâr, güneş, jeotermal ve diğer çevre dostu enerji kaynaklarını kullanımın artması ülkelerin enerji ihtiyaçlarını karşılayarak çevresel iyileşmeye katkı sağlayacaktır. Son dönemde ülkelerin milli gelirden sağlık harcamalarına ayrılan kaynakların artış göstermesi ilgili alanda sürdürülebilirliğinin tartışılmasını gündem haline getirmiştir. Bu bakımdan sağlık harcamalarını etkileyen faktörlerin araştırılması politika yapıcılara önemli bilgiler sunacaktır. Bu çalışma 2000-2020 yılları arasında veri ulaşılabilirliği göz önüne alınarak seçilmiş 13 AB (Belçika, Çek Cumhuriyeti, Danimarka, Almanya, Avusturya, İspanya, İsveç, İtalya, Portekiz, Yunanistan, Finlandiya, Fransa ve Hollanda) ülkesinde yenilenebilir enerji tüketiminin sağlık harcamalarını hangi yönde etkilediğini araştırmaktadır. Çalışmada yenilenebilir enerji tüketimin en yüksek olduğu ülkeler seçilmiştir. Son dönemde artan sağlık harcamalarının sürdürülebilirliği önem arz etmesi nedeniyle yenilenebilir enerji tüketimi ve ekonomik büyüme değişkenleri analize tabi tutularak konu bakımından sınırlandırılmıştır. Bu bağlamda bulguların politika yapıcılara önemli bilgiler sunacağı düşünülmektedir. Literatürde ilgili konu üzerinde çalışmaların sınırlı olması, panel eşbütünleşme ve panel eşbütünleşme katsayı tahminci testlerinin kullanılmaması çalışmanın ana motivasyonunu oluşturmaktadır. Yenilenebilir enerji tüketimi ve sağlık harcamaları verilerinin 2000 yılından 2020 yılına kadar elde edilmesi çalışmanın ana sınırlılığını oluşturmaktadır. Analiz yöntemi olarak Lagrange carpani (LM) eşbütünleşme ve Common Corelated Effect (CCE) eşbütünleşme tahminci testleri kullanılmıştır. Bu testlerin uygulanmasından önce yatay kesit bağımlılığı ve homojenlik durumu belirlenmiştir. Birim kök sürecinin incelenmesinde Fourier LM birim kök testi kullanılmıştır. Daha sonra eşbütünleşme testi ve uygulamanın son aşaması olan eşbütünleşme katsayı tahmincileri belirlenmiştir. Panel eşbütünleşme katsayı tahmin sonuçlarına göre 13 AB ülkesi için yapılan genel incelemede, yenilenebilir enerji tüketiminin sağlık harcamaları üzerindeki etkisi %10 düzeyinde istatistiki olarak anlamlıdır. Buna göre yenilenebilir enerji tüketimindeki %1’lik artış sağlık harcamalarını % 0,197 oranında azaltmaktadır. Ülke bazlı incelemelerde Danimarka, İspanya, İsveç ve Yunanistan’da yenilenebilir enerji tüketiminin sağlık harcamaları üzerindeki etkisi istatistiksel olarak anlamlı ve negatif bulunmuş ve yenilenebilir enerji tüketimindeki artış sağlık harcamalarını sırasıyla %0,132, %0,111, %1,288 ve %0,782 oranında azaltmaktadır. GSYİH’nin ise sağlık harcamaları üzerindeki etkisi %1 düzeyinde istatistiki olarak anlamlıdır. Buna göre gelirdeki %1’lik artış sağlık harcamalarını %1,071 oranında artırmaktadır. Ülke bazlı incelemelerde Almanya, Avusturya, Belçika, Çekya, Fransa, İspanya, İsveç, İtalya, Portekiz ve Yunanistan’da katsayılar istatistiki olarak anlamlı ve pozitif yönlüdür. İlgili ülkelere ait söz konusu bulgular çevre dostu, tekrar tekrar kullanılabilen enerji tüketimindeki artışın çevre üzerinde olumlu etki yaratarak sağlık harcamalarını azalttığı ve sağlık finansmanının sürdürülebilirliğine olumlu katkı sağlayacağını ifade etmektedir. Buna ek olarak GSYİH’deki artışların sağlık harcamalarına yansıyarak sağlık kalitesinin arttığı vurgulamaktadır.

This study investigates how economic complexity mediates the effect of Renewable Energy Consumption on Sustainable Development in Sub-Saharan Africa for the period 1990 to 2021 and using data for 32 countries. It considered the enhancing effect of renewable energy consumption on sustainable development, and assessed the extent to which economic complexity mediates the effect of renewable energy consumption on sustainable development in Sub-Saharan Africa. For this purpose, the study employed the ARDL Pooled Mean Group estimation technique for the baseline estimations, while the FGLS, PCSEs and Driscol Kraay estimations for robustness checks. The findings of the study reveal that renewable energy consumption significantly enhances sustainable development. The findings equally reveal that economic complexity significantly mediates the enhancing effect of renewable energy consumption on sustainable to the extent that of the total effect of an increase in renewable energy consumption on sustainable development, about 45.75% is transmitted indirectly through economic complexity. The policy inferences from these findings are that the increased and deliberate improvement and use of renewable energy sources would contribute enormously in reducing the ecological damages arising from development, thereby enhancing as sustainability. Moreover, the measures to boost renewable energy use need to be accompanied by rigorous measures to promote the increased production and exportation of more technologically sophisticated products by Sub-Saharan African countries.

Renewable energy consumption and economic growth nexus: Evidence from a threshold model

The heterogeneity of renewable energy consumption, carbon emission and financial development in the globe: A panel quantile regression approach

In the context of growing global climate change awareness and intensifying environmental degradation, technological innovation in renewable energy has become a key realization method for sustainable development. This paper uses data samples from 30 provinces, municipalities, and autonomous regions in China (excluding Tibet, Hong Kong, Macao, and Taiwan due to data availability) from 2007–2022, constructs an SFA model to measure carbon emission efficiency, and innovatively investigates the U-shaped impact of technological innovation in renewable energy on carbon emission efficiency along with the moderating effects of informatization level and fiscal decentralization. The empirical findings reveal the following: (1) Technological innovation in renewable energy demonstrates a U-shaped impact on carbon emission efficiency, with a negative impact before inflection point 2.596605 and a positive impact after the inflection point. (2) The informatization level plays a positive regulating role in the impact of technological innovation in renewable energy toward carbon emission efficiency, while fiscal decentralization exerts a negative regulating effect. (3) The impact of technological innovation in renewable energy concerning carbon emission efficiency varies depending on regional differences, industrial structure levels, and technological innovation levels in renewable energy. The conclusions of this paper are helpful for promoting the development of technological innovation in renewable energy, improving carbon emission efficiency, and advancing sustainable socio-economic development.

Global climate change is profoundly affecting human survival and development and is a major challenge facing the international community today. Therefore, this study aims to examine the effect of renewable energy consumption and green innovation on CO2 emission reduction in E7 countries within the framework of macroeconomic indicators, and whether they can contribute to achieving carbon neutrality targets. To achieve the purpose of the study, firstly, the fully modified OLS, dynamic OLS, classical cointegration regression, Bayer–Hanck cointegration, and ARDL bounds test are employed in this study. The existence of a long-term cointegration or long-term linkage is confirmed by empirical evidence. Secondly, the empirical outcomes of FMOLS, DOLS, and CCR reveal that a 1% increase in renewable energy consumption and financial innovation reduces the CO2 emissions by 0.357% (0.301%), 0.428% (0.336%), and 0.348% (0.306%), while a 1% rise in economic growth and inflation raises the CO2 emissions by 0.881% (0.015%), 0.946% (0.043%), and 0.875 (0.022%), respectively. Similarly, the results of ARDL demonstrate that renewable energy consumption and financial innovation contribute to the improvement of environmental quality, while economic growth and inflation exacerbate the deterioration of environmental quality. However, green innovation has no apparent impact on environmental sustainability. Finally, in the short term, the paths of renewable energy consumption and economic growth on environmental sustainability under macroeconomic conditions are almost identical to those in the long term, while green innovation significantly improves the environmental quality of economic development in E7 countries. To sum up, to achieve sustainable economic and environmental development in the context of carbon neutrality, policy makers in developing countries should fully consider the role of renewable energy and green innovation, and actively strive to promote green and low-carbon energy development, to make new contributions to global environmental governance.

A significant obstacle to the scaling of renewable energy is the concern that increased consumption of renewable energy could have a negative impact on economic growth, due to the higher cost of renewable energy compared to fossil energy. To examine how exactly renewable energy consumption impacts economic growth, this study uses a non-linear panel threshold model with trade openness, financial development, and per capita income as threshold variables, to analyze the long-term non-linear relationship between renewable energy consumption and economic growth in 28 European Union countries from 2007 to 2017. The results show that (i) renewable energy consumption has significant threshold effect on economic growth. First, the effect of renewable energy consumption on economic growth is positive and significant if and only if it surpasses a certain threshold of trade openness. Second, a moderate financial development interval makes the consumption of renewable energy have a positive effect on economic growth, and if it is too low or too high, it will have a negative effect. Third, as for income level, the promoting effect of renewable energy consumption on economic growth is showing a "stepwise growth" feature, which means, when the income level surpasses its threshold value, the positive effect is strengthened. (ii) The results of the fixed-effects model show that, overall, renewable energy consumption promotes economic growth. (iii) The changes in the number of countries in different threshold intervals indicate that the positive impact of renewable energy consumption on economic growth in the EU is increasing.

Renewable energy is known for its lower environmental impact compared to conventional fossil fuels. The integration of financial openness plays a pivotal role in driving renewable energy consumption. The existing literature has predominantly overlooked the nonlinear impact of financial openness on renewable energy consumption. This study examines the nonlinear impact of financial openness on renewable energy consumption across different regions in Asia, such as Central Asia, East Asia, South Asia, Southeast Asia, and West Asia, by employing linear and nonlinear cross-sectionally augmented autoregressive distributed lag techniques. The findings of the linear analysis confirm that financial openness favorably impacted renewable energy consumption in the long run in all regions. On the other side, the nonlinear analysis highlights that an increase in financial openness promotes renewable energy consumption in all regions except West Asia. In contrast, the fall in financial openness hurt renewable energy consumption in Asia, Central Asia, and West Asia. Greenhouse gas emissions and GDP promote renewable energy consumption in almost all regions in both linear and nonlinear analysis, and ICT and trade help the consumption of renewable energy to rise in some regions. Policymakers in Asia and its subregions should focus on increasing the collaboration between the financial sectors of the Asian economies and increasing the flow of funds to renewable energy sources in Asia.

PurposeWhile there are enormous studies on the determinants of environmental degradation, empirical studies on the effect of renewable energy consumption and economic growth on the environment remain limited. The purpose of this paper is to examine the asymmetric effect of renewable energy consumption and economic growth on environmental degradation in 31 selected sub-Saharan African countries spanning from 1990 to 2018.Design/methodology/approachTo examine possible asymmetric effects of the exogenous variables on environmental degradation, we used the panel nonlinear autoregressive distributed lag approach and secondary data was sourced from the World Bank (2021).FindingsThe cointegration test results suggest that there is a long-run cointegration among the variables whereas our main findings indicate that environmental degradation responds asymmetrically to changes in renewable energy consumption and economic growth. The results further reveal that both positive and negative shocks in renewable energy consumption reduce environmental degradation. On the other hand, positive and negative shocks in economic growth increase environmental degradation in the long run.Research limitations/implicationsThe implications of this study include the need for policymakers in sub-Saharan Africa to encourage the utilization of renewable energy as it reduces environmental degradation. Also, governments in the subregion should gradually replace the usage of fossil fuels by adapting renewable energy sources so as to achieve higher economic growth.Originality/valueThe positive and negative shocks of renewable energy consumption and economic growth on environmental degradation are examined to ascertain their asymmetric relationships.

The research investigates the effect of renewable energy consumption on economic growth as well as analyzing the dynamic relationship between both variables from 1990 to 2022. Annual secondary data covering the period between 1990 and 2022 were used in the study. Data on real gross domestic product, renewable energy consumption (% of total final energy consumption), gross capital formation (% of GDP), labor force, total and trade (% of GDP) were sourced from World Development Indicator. The study applies Johansen co-integration test and Vector Error Correction Model (VECM) to examine the effect of renewable energy consumption on economic growth and other explanatory variables as well as using pairwise granger causality test to examine the causal relationship between both variables. The empirical evidence revealed long-term relationship between renewable energy consumption and economic growth. Evidence shows that there is no causality either unidirectional or bi-directional between both variables. In short run, renewable energy consumption revealed a significant positive impact on economic growth. This shows that renewable energy may stimulate economic growth, particularly as it has a greater short-term impact on economic growth than capital formation. The key policy implication drawn from the results indicate the need for investment in renewable energy technologies and infrastructure, which can help to increase the availability and affordability of renewable energy, improve workforce development in Nigeria renewable energy sector.

The effect of renewable energy consumption on economic growth: Evidence from top 38 countries

One of the significant economic growth problems in Kenya is the income inequality and poverty rate which has made it impossible for among the households to afford clean energy. While the country has experienced some economic growth over the years, it is not yet clear whether the adoption of renewable energy has been the cause of this growth. There have been mixed results on the studies done on renewable energy use and their effect on economic growth and therefore calls for further research. The general objective of the study was to determine the effect of renewable energy consumption on economic growth in the Kenyan economy. Specifically, the study specific objectives were to determine the effect of solar energy consumption, geothermal energy consumption, and hydroelectric energy consumption and wind power energy consumption on economic growth in Kenya. This was made possible through an analysis of 37 years’ data from 1986 to 2022 on an annual time series basis. This study employed the endogenous growth theory as the main theory of the study and triple bottom line theory as the supplementary theory. The study employed an explanatory research design and analyzed data using the Autoregressive Distributed Lag model to establish whether renewable energy consumption had any effect on economic growth of the Kenyan economy. Findings of diagnostic test demonstrated that there was no multicollinearity among the independent variables, residuals were homoscedastic, and there was no autocorrelation among the residuals. The results of the Jarque bera normality test showed that the study's variables were normally distributed. The Augmented dickey fuller unit root test both showed that there was no unit root and that the variables had a short run relationship. Additionally, the model's stability over time was confirmed by the CUSUM test. Findings of the study were: the relationship between hydroelectric energy consumption and economic growth was positive and significant, wind power energy consumption and economic growth was positive and significant and between geo-thermal energy consumption and economic growth was positive and significant. The study concluded that geo-thermal energy consumption, hydroelectric energy consumption and wind power energy consumption significantly affect economic growth positively. The study therefore recommends that the Kenyan government should set ambitious targets for renewable energy consumption such as a specific percentage of electricity generation or overall energy consumption. The Kenyan government should enhance and enforce regulatory frameworks specific to renewable energy in order to provide a stable and predictable investment environment. Finally, the Kenyan government should focus on expanding access to renewable energy solutions in rural areas, where energy access is limited. Implementing off-grid renewable energy systems, such as solar home systems and mini-grids, can provide clean and reliable electricity to rural communities.