The role of renewable energy finance in achieving low-carbon growth: contextual evidence from leading renewable energy-investing countries

Abstract

Although switching from non-renewable to renewable energy is believed to stimulate low-carbon growth, the means to achieving this energy transition and their economic and environmental effects have largely remained unexplored. Therefore, this study focuses on evaluating how public investment in renewable energy-related research and development projects impacts the carbon productivity levels in the “top-10 renewable energy-investing countries” in the world. The estimation strategy considered in this study is designed to handle cross-sectional dependency and slope heterogeneity concerns in the data. Among the key findings, public research and development-related investments in renewable energy are observed to boost carbon productivity. In contrast, natural resource consumption and net exports are found to reduce carbon productivity while urbanization is evidenced to be ineffective in influencing carbon productivity. Besides, public research and development investment for renewable energy development exerts a moderating role by jointly boosting carbon productivity with natural resource consumption and net exports. Moreover, it is also seen to inflict a mediating effect by jointly boosting carbon productivity with urbanization. In line with these findings, the concerned governments are recommended invest more in research and development projects that can stimulate technological innovation that is necessary for amplifying the rate of renewable energy production.