The Causal Relationship between Public Investment in Renewable Energy and Climate Change Performance Index

Hasan Vergil (), Marwa Mursal (), Muhittin Kaplan () and Asad Ul Islam Khan ()
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Hasan Vergil: Department of Economics, Ibn Haldun University, Istanbul, Turkey
Marwa Mursal: Department of Economics, Ibn Haldun University, Istanbul, Turkey
Muhittin Kaplan: Department of Economics, Ibn Haldun University, Istanbul, Turkey
Asad Ul Islam Khan: Department of Economics, Ibn Haldun University, Istanbul, Turkey

International Journal of Energy Economics and Policy, 2024, vol. 15, issue 1, 121-130

Abstract: Addressing the current environmental challenges requires optimizing climate actions and understanding the complex relationships among them. This paper aims to provide insights into how public investment in renewable energy influences various dimensions of climate change, including emissions, efficiency, renewable energy deployment, and policy effectiveness. This study seeks to explore the causal connection between public investment in renewable energy and the Climate Change Performance Indicator (CPI) from 2007 to 2017, utilizing data provided by German Watch. The method used is Dumitrescu and Hurlin's (2012) Granger Causality. The study unveils a unidirectional causality from Renewable Energy Investment (REI) to climate change performance. Additionally, it emphasizes the critical role of energy efficiency in attracting investments in renewable energy. Surprisingly, the study finds that REI influences the quality of climate policy. Furthermore, the study identifies a bi-directional causality between a renewable energy share and REI. The contribution of the paper lies in its analysis of public investment in renewable energy, covering areas beyond just public finance for R&D in renewable energy, as also exploring the causal link between this investment and CPI. It offers policymakers insights on how financial governmental interventions can effectively drive climate action.

Keywords: Renewable Energy; Public Investment in Renewable Energy; Energy Efficiency; Climate Policy (search for similar items in EconPapers)
Date: 2024
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DOI: 10.32479/ijeep.17308

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