Natural Resource Rents and Energy Transition: Overcoming Barriers to Achieve Affordable and Clean Energy (Sustainable Development Goal 7)

Rongrong Li, Qiang Wang and Zhuang Yang

Sustainable Development, 2025, vol. 33, issue S1, 757-786

Abstract: Achieving Affordable and Clean Energy (SDG 7) requires a global shift from fossil fuel dependency to sustainable energy sources, yet the role of natural resource rents (NRR) in this transition is paradoxically understudied. Moving beyond linear assumptions, this study uncovers a threshold effect in the NRR‐energy transition nexus: while moderate rents may fund clean energy investments, excessive dependence triggers a “resource curse” that locks nations into fossil fuel pathways. Focusing on 142 countries (2012–2021), we employ a panel threshold model to dissect how five rent types—oil, coal, natural gas, minerals, and forests—differentially shape transition outcomes. The results shows that while high oil and coal rents significantly impede energy transition, natural gas rents act as a bridge toward cleaner energy due to its lower carbon intensity. Additionally, we identify income‐based disparities in energy transition dynamics: in high‐income countries, excessive resource rents exacerbate fossil fuel reliance, while in lower‐middle‐income economies, economic pressures drive a shift toward renewable energy. The study underscores the resource curse hypothesis, where resource‐rich nations face institutional and economic barriers to clean energy adoption. However, our findings also highlight that through effective policy frameworks, such as those endorsed by the Paris Agreement and the United Nations Sustainable Development Goals (SDGs), countries can effectively manage resource rents to foster a more rapid and equitable energy transition. By leveraging such frameworks, it is possible to channel resource rents toward advancing renewable energy technologies, reducing dependence on fossil fuels, and addressing the global climate challenge.

Date: 2025
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https://doi.org/10.1002/sd.70014

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Persistent link: https://EconPapers.repec.org/RePEc:wly:sustdv:v:33:y:2025:i:s1:p:757-786

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