Is there convergence in renewable energy deployment? Evidence from a new panel unit root test with smooth and sharp structural breaks

Aysegul Corakci and Tolga Omay

Renewable Energy, 2023, vol. 205, issue C, 648-662

Abstract: This study examines whether the contribution of renewable energy to the total primary energy supply converges in a panel of 24 OECD countries over the period 1960–2020. To this end, a new panel unit root test that allows for both sharp and smooth breaks is proposed to test for the stochastic convergence hypothesis. Although renewable energy convergence is not rejected when the newly proposed test is applied to the full panel of OECD countries, it found only moderate support within the members of the panel using a sequential panel selection methodology. In fact, in two high-income OECD countries, the contribution of renewable energy to the primary energy supply shows no sign of convergence: Poland and Iceland. Therefore, the renewable energy shares seem to be converging to a common steady state in only a group of OECD countries over the long run. This uneven pattern of convergence, in turn, suggests that the OECD countries are still far away from developing a common sustainable renewable energy target, calling for urgent international policy cooperation to encourage the divergent economies to seek out the menu of policies that ensure the worldwide success of renewable energy transformation.

Keywords: Renewable energy; Energy supply; Stochastic convergence; Panel unit root test with sharp and smooth breaks (search for similar items in EconPapers)
JEL-codes: C23 Q40 Q42 Q48 Q56 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:renene:v:205:y:2023:i:c:p:648-662

DOI: 10.1016/j.renene.2023.01.119

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