Determinants of Renewable Energy Development

Within the study we investigate the key determinants (income, energy security, and environmental policies) along with commonly used by other researchers control variables that affect renewable energy development. In this study we used unbalanced panel data with a time span from 1970 till 2020 across 58 (max) countries, to evaluate the determinants of renewable energy (RE) development. Within the study, we investigate three key hypotheses: (a) reverse relationship between emissions of CO2 and RE; (b) non-linear e.g., U-shape, relationship between RE and income (GDP per capita), reversal to Environmental Kuznets Curve; (c) effects of energy security and environmental policies on RE evolution. We applied regression analysis on panel data and semi-parametric modelling to answer our research questions and test hypotheses. We have created new energy security variable to evaluate hydrocarbon self-sufficiency for each country. Our study confirms reverse relationship, hypotheses (a), and U-shape (b) relationship, a few case-studies for countries have been brought up to see whether they pass or not inflection point. Within hypotheses (c) we expect negative correlation between self-sufficiency in hydrocarbons and RE development, this was confirmed on full sample and supports hypothesis of the “lobby effect”. However, when we split countries into sub-samples results are not consistent. Environmental policies support gives positive correlation between stringency of measures and RE which confirms our initial hypotheses (c). We conclude with some recommendations on how to accelerate RE development based on our research.