The sufficient level of growth in renewable energy generation for coal demand reduction

Abstract

Today, renewable energy is being used to substitute traditional energy sources such as coal. Investing in renewable energy is an important direction in the development of the modern economy while preserving the quality of the environment and decreasing CO2 emissions. Despite the increase in renewable energy generation, the consumption of conventional energy such as coal in some years continues to increase as well. This shows that replacing coal with renewable energy may not be sufficient. If we can find a sufficient renewable energy generation growth rate that can reduce coal usage, this could be an important part of determining the growth of each country’s renewable energy generation. This study aims to identify significant kink point values in renewable energy generation growth that can reduce the amount of coal consumption in order to be preliminary information for learning, planning, investing, and developing renewable energy generation for interested parties and policymakers. To find the kink point, the study implemented the panel kink regression method. The study examined the growth of renewable energy generation and the use of coal for energy production in two groups: (1) The group with the most coal consumption in the world, and (2) The group with the most renewable energy generation countries. The results showed that the significant renewable energy generation growth that caused the reduction in coal consumption was equal to 1.99% per year. Not only the increase in renewable energy production make the change, but also other factors that play an important role in the reduction of coal for energy production such as generating enough renewable energy to serve the country’s energy demands and strong environmental policies on CO2 emissions.