The role of energy subsidies, savings, and transitions in driving energy transformations toward net-zero emissions

Ying Zhang and Zahid Zahoor

Energy, 2025, vol. 320, issue C

Abstract: Achieving net-zero emissions through energy transformation necessitates a multifaceted strategy, including removing energy supply chain subsidies, accelerating energy transitions, and deploying clean energy technologies. This study investigates the impact of energy subsidies, savings, and transitions on energy transformations toward net-zero emissions in OECD countries from 2000 to 2022. Clean energy technology adoption and renewable energy consumption are incorporated as moderating variables. Employing advanced empirical methodologies—including cross-sectional dependence analysis, slope heterogeneity testing, Westerlund ECM panel cointegration, and Arellano–Bond dynamic panel-data estimation—the study reveals that energy subsidies, energy transitions, clean energy technology, and renewable energy consumption are positively associated with progress toward net-zero emissions. Conversely, energy savings exhibit a negative relationship with energy transformations, potentially reflecting short-term trade-offs in the transition process. The findings underscore the critical role of financial incentives, such as tax credits, grants, and low-interest loans, in overcoming initial investment barriers and fostering the widespread adoption of renewable energy. By establishing clear targets for phasing out fossil fuel subsidies and reallocating these funds to renewable energy infrastructure, research, and development, OECD countries can accelerate the transition to a sustainable energy future.

Keywords: Energy transformations for net-zero emissions; Energy subsidies; Saving energy; Energy transitions; Digitalization of clean energy technology; OECD countries (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:320:y:2025:i:c:s0360544225008515

DOI: 10.1016/j.energy.2025.135209

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