Proven Reserve Oil and Renewable Energy Nexus: Efficacy of Policy Stringency

Shaiara Husain, Kazi Sohag () and Yanrui Wu
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Shaiara Husain: Business School, University of Western Australia, http://www.web.uwa.edu.au/person/shaiara.husain
Yanrui Wu: Business School, The University of Western Australia, http://www.web.uwa.edu.au/person/yanrui.wu

No 24-02, Economics Discussion / Working Papers from The University of Western Australia, Department of Economics

Abstract: Pro-environmental technologies, environmental taxes and environmental protection expenditure are three important policy tools for patronizing renewable energy production (REP) in OECD countries. With this background, we evaluate the efficacy of environmental policies in promoting renewable energy production by applying the CS-ARDL method and panel data of 24 OECD economies incorporating the role of proven reserve oil during 1990-2022. The empirical analysis of this study demonstrates that the environmental policy stringency, encompassing market and non-market approaches, is positively affiliated with the growth in REP. Our findings also affirm the proposition that proven oil reserves are antagonistic to the growth of renewable energy production considering the intergenerational energy security aspect. Positive shock in oil price augments the renewable energy production validating the substitution effect between renewable energy and non-renewable energy. Our findings are robust when alternative measures of policy stringency, considering both supply-side (cost-push) and demand-side (demand-pull) socio-technical incentives are used. The empirical findings reinforce existing market-based mitigation policies to promote renewable energy production adhering to the energy security agenda of sustainable development goals.

Keywords: Renewable Energy; Environmental Policy Stringency; Panel Data Analysis; OECD Countries (search for similar items in EconPapers)
JEL-codes: C23 Q21 Q28 (search for similar items in EconPapers)
Pages: 39
Date: 2024
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Journal Article: Proven reserve oil and renewable energy nexus: Efficacy of policy stringency (2024)
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