How AI shapes greener futures: Comparative insights from equity vs debt investment responses in renewable energy

Jun Wen, Hua-Tang Yin, Chun-Ping Chang and Kai Tang

Energy Economics, 2024, vol. 136, issue C

Abstract: This paper offers insights regarding the potential of AI software development to narrow the financing gap in renewables. By employing a panel of 49 economies covering 2011–2020, we estimate a two-way fixed effects model and reveal that AI software development significantly promotes equity investments in renewables while imposing no substantial effect on debt investments in the same field. Such results are robust to extra controls, outlier consideration, and the endogeneity concern. Moreover, it is found that AI software development's enhancing effect on equity investments in renewables manifests when the stringency of environmental policies, especially the intensity of public funding support for environmental-related R&D, is sufficiently high. Furthermore, AI software development has a more profound positive impact on equity investments in renewables in economies with more equal business opportunities and lower age dependency.

Keywords: AI software development; Investment in renewables; Energy; Environmental policy stringency; Social structure (search for similar items in EconPapers)
JEL-codes: P28 Q42 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:136:y:2024:i:c:s0140988324004080

DOI: 10.1016/j.eneco.2024.107700

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