Climate policy uncertainty and its impact on energy demand: An empirical evidence using the Fourier augmented ARDL model

Zhe Tu, Bisharat Hussain Chang, Raheel Gohar, Eunchan Kim and Mohammed Ahmar Uddin

Economic Analysis and Policy, 2024, vol. 84, issue C, 374-390

Abstract: Global climate change and its subsequent impact on energy demand present pressing issues for policymakers. Existing literature presents various determinants of energy demand, but the intricate relationship between energy demand and climate policy uncertainty (CPU) remains underexplored. Utilizing the Fourier-augmented ARDL (FA-ARDL) model and drawing from monthly data spanning March 1995 to August 2022, we investigate the impact of CPU on energy demand in China. Our study finds a significant long-run co-integration between climate policy uncertainty (CPU) and renewable energy demand. The FA-ARDL analysis shows that CPU negatively impacts renewable energy demand in both the short and long term, as it leads to higher renewable energy prices. These increased prices deter stakeholders from investing in or adopting renewable technologies, making renewables less competitive compared to traditional energy sources. Our findings are helpful for policymakers to communicate the climate objectives since mitigating climate-related uncertainties would substantially drive renewable energy consumption.

Keywords: China, Climate policy uncertainty; Energy demand; SOR unit root test; Fourier augmented ARDL approach (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0313592624002108
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:ecanpo:v:84:y:2024:i:c:p:374-390

DOI: 10.1016/j.eap.2024.08.021

Access Statistics for this article

Economic Analysis and Policy is currently edited by Clevo Wilson

More articles in Economic Analysis and Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().