Investigating the effect of green finance initiatives on renewable energy penetration in Europe

Tibor Szendrei, Andrea Eross, Mustapha Mohammed and Erkal Ersoy

No 2024-07, Accountancy, Economics, and Finance Working Papers from Heriot-Watt University, Department of Accountancy, Economics, and Finance

Abstract: As climate change becomes an ever-present problem, efforts have been made to make energy generation greener. One key tool to encourage renewable energy generation are feed-in-tariff policies, which have been employed in various countries across Europe. Using quarterly data, this study investigates the impact these policies had on the greening of the economy, on carbon emissions and on macroeconomic factors in European countries for the period 2011-2021. To achieve this, an energy augmented production function is postulated and estimated using a Bayesian Global VAR framework. We find a large degree of heterogeneity in the impact of feed-in-tariffs have on renewable energy penetration across the countries. Furthermore, negative externalities of simultaneous employment of green finance is found, highlighting that some coordination might be necessary to maximise the impact of such policies in achieving the goal of a greener energy profile.

Keywords: Bayesian Global VAR; Energy policy; Feed-in-tariff; GIRF; renewable energy; spillover effects (search for similar items in EconPapers)
JEL-codes: Q43 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-eec, nep-ene and nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:hwuaef:299236

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