How does fiscal decentralization lead to renewable energy transition and a sustainable environment? Evidence from highly decentralized economies

Yunpeng Sun, Pengpeng Gao and Asif Razzaq

Renewable Energy, 2023, vol. 206, issue C, 1064-1074

Abstract: Effective fiscal management ensures the coordination of taxes and spending authority for attaining inclusive and sustainable growth. Therefore, this study intends to estimate the direct and indirect channels of expenditure, revenue, and composite fiscal decentralization on carbon emissions through renewable energy transition in highly decentralized countries. It employs a cross-sectional augmented auto-regressive distributed Lag (CS-ARDL) method, allowing dependencies across countries and heterogeneity in the slope parameters. In the long run, the direct effects of expenditure (revenue) decentralization on carbon emissions are significantly positive (negative) with coefficient magnitudes of 0.16% and 0.04% (0.09% and 0.08%). The indirect effects of expenditure and revenue decentralization are substantially negative through renewable energy consumption with the coefficient magnitude of 0.135% and 0.138%, respectively. In contrast, composite decentralization and its interactive terms with renewable energy show an emissions-mitigating effect of 0.179% and 0.192%, respectively. These outcomes exhibit that the down-delegation of financial authority (revenue or composite) at local government increases resource efficiency and leads to higher renewable energy consumption. Similar results are echoed in the short run; however, the magnitude of coefficients is significantly higher in the long run. The overall findings provide fascinating policy recommendations.

Keywords: Renewable energy transition; Fiscal decentralization; Sustainable development (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (35)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0960148123002136
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:renene:v:206:y:2023:i:c:p:1064-1074

DOI: 10.1016/j.renene.2023.02.069

Access Statistics for this article

Renewable Energy is currently edited by Soteris A. Kalogirou and Paul Christodoulides

More articles in Renewable Energy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().