The Effect of Total Energy Subsidy, Renewable and Non-Renewable Energy Subsidy on the Environment in Selected Countries of the World

Ahmad Jafari Samimi (), Shahryar Zaroki () and Mohammad Amiri Largani ()
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Ahmad Jafari Samimi: Professor of Economics, University of Mazandaran
Shahryar Zaroki: Associate Professor, Department of Energy Economics, University of Mazandaran
Mohammad Amiri Largani: MA in Economics, University of Mazandaran

Quarterly Journal of Applied Theories of Economics, 2024, vol. 11, issue 1, 149-174

Abstract: Many factors cause environmental problems. One of the important factors is energy subsidies. The main goal of this research is to investigate the impact of total energy subsidies and renewable and non-renewable energy subsidies on the environment. For this purpose, for 22 selected countries of the world in the period of 2010-2020, the method of dynamic panel data and generalized moments estimator has been used. The results indicate that the total energy subsidy has a negative effect on the environment in countries where the subsidies allocated for renewable energy are higher. At the same time, this effect is positive for countries that use more renewable energy subsidies. In the separation of energy subsidies, subsidies for non-renewable energies have a negative effect, and subsidies for renewable energies have a positive effect on the environment. Also, the increase in the ratio of non-renewable energy subsidies to renewable energy subsidies has a negative effect on the environment. Also, foreign direct investment has a negative effect on the environment, and the Kuznets environmental curve was confirmed in connection with the U-shaped effect of per capita income on environmental performance. According to other results, the corruption perception index has a positive effect on the environment. Based on the results of the research, it is suggested that the subsidy of non-renewable energy be minimized to prevent environmental degradation and that more suitable alternatives be looked for to achieve the goals of sustainable development. Also, more use of renewable energies due to clean energy, optimization of energy consumption, and formulation of energy consumption standards and criteria are other effective steps in reducing energy consumption and preserving the environment

Keywords: Environment; Energy Subsidy; Renewable and Non-renewable; Dynamic Panel Data (search for similar items in EconPapers)
JEL-codes: C33 H23 Q56 (search for similar items in EconPapers)
Date: 2024
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