The role of energy security and economic complexity in renewable energy development: evidence from G7 countries.

Abstract

The development of renewable energy is receiving more attention as a result of environmental degradation and energy instability. Despite a large literature on the nexus between energy security, economic complexity, and energy consumption, there are few attempts to analyze the impact of energy security and economic complexity on renewable energy. This paper examines the heterogeneous impacts of energy security and economic complexity on renewable energy in G7 countries from 1980 to 2017. The estimated results obtained from quantile regression show that energy insecurity is a driving force of renewable sources although its impact is heterogeneous across the distribution of renewables. In contrast, economic complexity hampers the development of renewable energy with the size of impact decreasing as the renewable energy sector progresses. In addition, we find that income positively affects renewable energy while the role of trade openness varies across the distribution of renewable energy variable. These findings lead to valuable policy implications for G7 countries to develop renewable energy.