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Industrialisation, state-related institutions, and the speed of energy substitution: The case in Europe

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  • Andal, Emmanuel Genesis T.

Abstract

This paper contributes insights on differences in observed rates of substitution for fossil fuels across countries as measured by changes in the energy mix. If some countries are relatively slower in substituting for fossil fuels, climate change will be addressed less successfully. This paper specifically investigates the role of industrialisation and state-related institutions in the speed of energy substitution in 19 European countries from years 2011–2018 using panel data econometric methods, and has three main results. This paper finds evidence that (1) higher industrialisation levels in the economy increase the speed of energy substitution; (2) that changes in industrialisation levels, not the levels themselves, decrease the speed of energy substitution, but state-related institutions in support of green energy policy weaken this effect; and that (3) higher degrees of state control of the electricity sector slows down energy substitution, but state-related institutions in support of green energy policy likewise weaken this effect. These findings imply that higher industrialisation levels require more energy in absolute terms, implying greater energy portfolio diversification in order to satisfy such energy demand, and that a faster energy substitution can result from a more liberalised electricity sector.

Suggested Citation

  • Andal, Emmanuel Genesis T., 2022. "Industrialisation, state-related institutions, and the speed of energy substitution: The case in Europe," Energy, Elsevier, vol. 239(PC).
    • Handle: RePEc:eee:energy:v:239:y:2022:i:pc:s0360544221025226
    DOI: 10.1016/j.energy.2021.122274
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