Understanding the drivers of the renewable energy transition

Abstract

Empirical evidence on renewable energy (RE) deployment remains controversial, and little consensus exists on how empirical determinants can shape a country's transition to a low-carbon economy. Using a sample of 38 countries from 2002 to 2020, we apply nonlinear panel data modeling, where the energy transition process can be properly treated. Our empirical results indicate the prominent role of geopolitical risk in influencing the use of RE, depending on the level of gross domestic product (GDP) per capita. Richer countries have a greater capacity to develop clean technologies in times of uncertainty; however, with fewer resources to bear the transition costs, the RE sector in low-income countries is more vulnerable to adverse geopolitical events.