What derives renewable energy transition in G-7 and E-7 countries? The role of financial development and mineral markets

Abstract

The enduring impact of the synergy between environmental sustainability and natural resources varies across countries depending on the economic structure. Though the transboundary effect of mineral resources and cleaner energy underlines the significance of environmental performance, this research aims to scrutinize this inclusive theme by investigating the dynamic effects of mineral markets, and financialization on energy transition in selected developed and developing countries from 1990 to 2019. The cross-sectional autoregressive distributive lags (CS-ARDL) model is applied to address slope heterogeneity and cross-sectional dependency. The empirical findings reveal that mineral markets significantly contribute to the energy transition process in accomplishing low-carbon power generation in G-7 countries. In contrast, financial development negatively influences energy transition; however, it has an insignificant effect on the E-7 countries. The study outcomes are verified by employing the augmented mean group (AMG) and common correlated effect mean group (CCEMG) estimators. These findings provide valuable policy recommendations for all stakeholders to drive the transition of renewable energy toward low carbon and green growth.