The impact of oil prices, financial development and economic growth on renewable energy use
International Journal of Energy Sector Management
ISSN: 1750-6220
Article publication date: 3 April 2023
Issue publication date: 5 February 2024
Abstract
Purpose
The purpose of this study is to verify all factors that promote renewable energy (RE) consumption. Past studies have shown that financial development (FD) and economic growth (EG) are the major drivers toward RE development, while oil prices had mixed outcomes in different regions by different studies.
Design/methodology/approach
Global warming effects have been the major reason of the transition by nations from fossil fuel use to RE sources that are considered as friendly to the environment. This research uses the fixed effects and random effects techniques, to ascertain the factors which impact RE development. The generalized linear model is also used to check the robustness of the Fixed Effects and Random Effects models’ results, while the Kao, Pedroni and Westerlund tests are used to check cointegration in the specified model.
Findings
The major findings of this study show the importance of EG and FD in promoting RE development. Oil prices, inflation rate and public sector credit present a negative effect on RE development, while foreign direct investment does not significantly impact RE development.
Practical implications
This research recommends the use of FD in promoting RE sources, as well as the stabilization of oil prices and consumer prices.
Originality/value
This research is important because it specifies the three proxies of FD, together with foreign direct investment inflation rate, EG and oil prices, in modeling RE. By investigating the impact of oil prices on RE in the emerging seven economies, this research becomes one of the few studies done in this region, as per the authors’ knowhow.
Keywords
Acknowledgements
Funding: No funding was received from any organization.
Competing interests: The authors declare that they have no competing interests.
Availability of data and materials: The data used in this paper is secondary data and was retrieved from Organization for Economic Co-operation and Development website www.oecd.org.
Code availability. Not applicable.
Authors’ contributions: AD: Writing – original draft, Software, Conceptualization and Methodology. MS: Data curation, Writing – review. HO: Editing, Supervision, Visualization and Investigation.
Consent of publication: The authors guarantee that this manuscript has not been previously published in other journals and is not under consideration by other journals. The authors also guarantee that this manuscript is original and is their own work.
Citation
Deka, A., Özdeşer, H. and Seraj, M. (2024), "The impact of oil prices, financial development and economic growth on renewable energy use", International Journal of Energy Sector Management, Vol. 18 No. 2, pp. 351-368. https://doi.org/10.1108/IJESM-09-2022-0008
Publisher
:Emerald Publishing Limited
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