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How AI shapes greener futures: Comparative insights from equity vs debt investment responses in renewable energy

Author

Listed:
  • Wen, Jun
  • Yin, Hua-Tang
  • Chang, Chun-Ping
  • Tang, Kai

Abstract

This paper offers insights regarding the potential of AI software development to narrow the financing gap in renewables. By employing a panel of 49 economies covering 2011–2020, we estimate a two-way fixed effects model and reveal that AI software development significantly promotes equity investments in renewables while imposing no substantial effect on debt investments in the same field. Such results are robust to extra controls, outlier consideration, and the endogeneity concern. Moreover, it is found that AI software development's enhancing effect on equity investments in renewables manifests when the stringency of environmental policies, especially the intensity of public funding support for environmental-related R&D, is sufficiently high. Furthermore, AI software development has a more profound positive impact on equity investments in renewables in economies with more equal business opportunities and lower age dependency.

Suggested Citation

  • Wen, Jun & Yin, Hua-Tang & Chang, Chun-Ping & Tang, Kai, 2024. "How AI shapes greener futures: Comparative insights from equity vs debt investment responses in renewable energy," Energy Economics, Elsevier, vol. 136(C).
    • Handle: RePEc:eee:eneeco:v:136:y:2024:i:c:s0140988324004080
    DOI: 10.1016/j.eneco.2024.107700
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    More about this item

    Keywords

    AI software development; Investment in renewables; Energy; Environmental policy stringency; Social structure;
    All these keywords.

    JEL classification:

    • P28 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Natural Resources; Environment
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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