Factors influencing renewable energy generation in developed and developing countries

Table 9 The results for the share of non-hydro RE generated in the short run

According to Table 9, the rise in GDP per capita impacts negatively on non-hydro renewable energy share in the high-income group. This output is in line with Cadoret (2016) and Lin (2017), who disclose a negative impact of this variable on the share of RE consumption and the share of non-hydro RE generation, respectively. The influence of per capita GDP in middle-income countries is positive, but this effect is too small to stimulate non-hydro renewable energy growth significantly. Thus, GDP per capita is not the leading factor of renewable energy adoption in the short run as it shows a too weak sway on both non-hydro RE generated and its share in total energy supply.

The estimates for trade openness are insignificant for high- and middle-income countries. However, this factor is positive for the low-income sample as well as for the global one. As reported in Tables 8-9, a rise in trade intensity affects differently on non-hydroelectricity generated and its share in total energy supply. There is a negative impact of this factor on RE generation in the global sample of countries. Simultaneously, there is a weak positive effect of trade on renewable energy share for the same group. Such an outcome is contradictive, that proves the necessity to use an alternative estimation method in order to capture a lagged impact of this variable.

Nevertheless, the coefficients of both specifications for trade variable are positive for the low-income group. Consequently, less developed economies are more inclined to buy renewable energy technologies with growth of trade intensity. In contrast, the demand for renewable energy technologies in richer countries does not soar with growing international trade.

The estimations for CO2 emissions variable are negative for all groups of countries. Therefore, a higher concentration of CO2 emissions leads to a lower share of non-hydro renewable energy. This outcome does not match with results of Aguirrea (2014) and Cadoret (2016), who confirm the positive impact of CO2 emissions on renewable energy share in high-income countries. Moreover, it contradicts to the findings received for non-hydro RE generated in low-income economies, shown in Table 8. The explanation of this inconsistency could be the same as for the factor of natural resources dependency. Although the rise in CO2 emissions stimulates to use clean energy sources, non-hydro RE share grows slowly due to a simultaneous increase in the usage of traditional energy sources.

The oil price has a positive impact on non-hydro RE share for all samples of countries. This outcome supports the findings of Aguirre (2014) and Lin (2017). The oil price influence is similar for all groups of countries in both specifications. Besides, the effect of gas and coal prices on RE share is also negative, and insignificant in case of gas price. Such results probably suggest that gas and coal prices are complementary energy sources in addition to renewables, while oil is a substitute energy source.

The effect of natural resources dependence on non-hydro RE share is negative for all groups of countries. There is a strong influence of this factor for all samples, apart from the middle-income group. Consequently, the higher share of natural resources rents restrains the development of renewable energy. Similar conclusions on the share of RE generated and consumed have been documented by Marques (2010) and Lin (2016), respectively. The output received corresponds with the result in Table 8 that natural resources dependence affects negatively on non-hydroelectricity generated for the same samples of countries.

5.2 Long-run dynamics

This research uses the DOLS method for the long run estimation. Table 10 reflects the results of estimation for non-hydro RE generation. While the output of the estimation process for non-hydro RE share is shown in Table 11.

According to Table 10, the effect of GDP per capita is also negative on renewable power generated for the middle-income group of countries. However, the strength of this factor remains weak. Trade openness continues to affect negatively on non-hydro renewable electricity production in the middle-income group. Therefore, growth of renewable technologies in actively developing economies could suffer from highly intensive trade. Meanwhile, the level of CO2 emissions has a positive influence on RE growth for the group of middle-income countries in the long run. That could be a sequence of high pollution levels of most emerging nations as their electricity generation mainly based on coal plants. Generally, received long-run effects for non-hydro renewable electricity generation are rather weak for the great part of analyzed countries. Probably with an application of supplementary techniques for long run estimation results could be more obvious and accurate.

Table 10 The results for non-hydro RE generated in the long run

The results in Table 11 show that the effect of GDP per capita on the share of RE is negative for low-income countries in the long run. According to this outcome, in weak economies, the share of non-hydro renewable energy in energy supply will decrease with the continuous rise of a country's per capita GDP. This tendency could be caused by the increased competitiveness of traditional energy companies in the power market.

The effect of trade openness on the share of RE, in the long run, is also positive for low-income and global samples. The output for the last group is contradictive as the impact of trade is negative for renewable electricity produced but positive for its share both in the short and long run. Perhaps trade intensity rise implies growth of energy imports, which affect negatively on both renewables and traditional energy. That is why the proportion of green electricity could increase as fossil fuels undermine even more than renewables. To prove this supposition further analysis with energy imports should be implemented.

The negative effect of CO2 emissions maintains in the long run for high-income and global sample. That may be a consequence of the continuing reduction of carbon dioxide emissions rate with the simultaneous growth of renewables in many developed economies in recent decades. That is a positive tendency, which gives hope for swift abatement of climate change consequences.

High-income and low-income economies show lasting sensitivity to oil prices growth in the long run as the share of non-hydro RE becomes increases. Whereas the estimates for the gas prices remain negative but show the significance that implies the existence of its lagged effect on renewable energy growth. Interesting to note that coefficients for coal price are positive but insignificant that admits the positive influence of coal price on renewable power share in the long run.

Table 11 The results for the share of RE generated in the long run

The estimates for both specifications, in the long run, reflect an insignificant effect of natural resources shares on non-hydro renewable energy growth. However, the signs of the coefficients remain the same for all country groups. Therefore, this factor could be a barrier in introducing renewable energy technologies only in the first years of development, but then it does not show a significant influence. This outcome contradicts to the results of Lin and Omoju (2017), who reveal a negative impact of this factor on non-hydro RE generation using DOLS estimation model.

Conclusion

This study investigates the factors influencing non-hydro renewable energy in a panel of 51 industrialized and emerging economies. The results show that the leading driver of non-hydro renewable energy generation in most countries is the oil price. The growth of oil price influences positively on renewable power generation and its share in total electricity supply in all groups of countries. This evidence affirms that renewable energy is a substitute for traditional energy sources. Thus, government policy aimed at decreasing the costs of renewable energy may stimulate its growth in the long run.

The main barrier to renewable energy adoption is a natural resources dependency. That is why countries with a high proportion of natural resources rents in their GDP are less inclined to develop renewable energy technologies. However, this effect ceases to be significant in the long run. Therefore, even fossil fuel reliant nations could successfully develop renewable energy; however, its growth will likely be postdated.

The effect of per capita GDP is extremely weak to influence significantly on renewable electricity generation growth in the short and long run. That rejects the assumption that economic wellbeing is crucial for renewable energy development. Trade openness provides non-hydro renewable energy development only in low-income countries. While in other groups of countries, an intensive trade undermines the growth of non-hydro renewable energy generation. The findings for trade openness are contradictive for the global sample. They indicate that it influences negatively on RE generation but positively on its share both in the short run and long-run periods. Perhaps it could be a consequence of energy import effect. The deeper analysis is needed to uncover this supposition.

As was expected, the level of CO2 emissions level is an essential engine for renewable energy growth in middle-income countries, which are characterized by a higher rate of industrialization and air pollution. While in high-income economies, this impact is negative, that means the presence of a declining trend in CO2 emissions with a simultaneous growth of green energy technologies.

Finally, gas and coal prices mainly have an insignificant and negative influence on renewable energy in the short and long run. This finding indicates about the complementary effect of these energy sources in addition to renewables.

The main limitations of the current study are missing data for some countries as well as zero electricity generation from non-hydro renewable energy in statistics. This restriction slightly affected the size of the final sample. Existing restrictions could be partially overcome if electricity generation from hydropower will be considered. That will permit to increase the final sample of countries, particularly the low-income group.

The accuracy of estimation could be improved choosing an alternative group division. For example, the separation on OECD and non-OECD countries or on emerging countries with or without China could prevent data outliers and biased outcomes.

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Appendix

Countries' membership by income group

Total non-hydro renewable energy generated by country

The share of non-hydro renewable energy generation by country

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