The nexus between variable renewable energy, economy and climate: Evidence from European countries by means of exploratory graphical analysis

Christina Carty () and Oscar Claveria
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Christina Carty: Northwestern University

No 202205, AQR Working Papers from University of Barcelona, Regional Quantitative Analysis Group

Abstract: We propose a new approach for the visual inspection of interactions between several variables related to the wind and solar energy sector, and a set of socioeconomic variables and natural factors that may be affecting the sector. Focusing on fifteen European countries in the period from 2007 to 2019, we use Categorical Principal Component Analysis to reduce our data into two factors, the first relating to energy consumption, greenhouse gas emissions, per capita income, and solar energy, and the second capturing climactic and sociopolitical factors. The dimensionality reduction also displays a decoupling between natural factors and variable renewable energy sources (VRES) development, particularly in the case of solar energy, and instead shows a more influential relationship with economic factors. We additionally project all countries into a perceptual map and observe three clusters that roughly correspond to the main European regions (Southern and Eastern Europe, Northern Europe and Western Europe). Finally, we plot the average level and growth level of both the wind and solar energy share for each nation and observe a negative relationship in wind share and a slightly positive relationship in solar share. Our results show that, especially for wind energy, countries with higher levels of overall renewable energy development are more likely to show more intense VRES development than countries who already have high existing levels of the technology in their renewable energy mix. Solar energy investment on the other hand is more likely to be dominated by countries with pre-existing high levels of solar in the renewables mix. Our results emphasize the importance of individual nations attitude towards renewables as a whole as playing a key role in VRES development, as much as the natural resource availability of these energies.

Keywords: Renewable energies; Wind share growth; Solar share growth; Economic growth; Human development; Multivariate analysis; Europe. JEL classification: C38; C55; O44; Q20; Q50. (search for similar items in EconPapers)
Pages: 33 pages
Date: 2022-05, Revised 2022-05
New Economics Papers: this item is included in nep-ene, nep-env and nep-mfd
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Working Paper: The nexus between variable renewable energy, economy and climate: Evidence from European countries by means of exploratory graphical analysis (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:aqr:wpaper:202205

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