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Sustainable energy consumption and finance in the presence of risks: Towards a green economy

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  • Hondroyiannis, George
  • Papapetrou, Evangelia
  • Tsalaporta, Pinelopi

Abstract

Moving towards a green economy, sustainable energy consumption and financial development amid mounting risks moved to center stage of policymaking and academia. Strengthening energy consumption from renewable sources is integral to the attainment of the overarching sustainable development goals of the Paris Agreement. The study employs data from 19 OECD economies spanning from 1990 to 2020 to explore the effect of risks on sustainable energy consumption. Using a multifaceted empirical approach -- comprising Panel OLS, MG estimators, quantile regression analysis and local projection approach -- results establish a key role for political, economic and financial risks in determining energy consumption from renewable sources. Results for the impact of finance indicators on sustainable energy consumption provide robust, though mixed, findings on how to bridge the climate financing gap. Our findings underscore the significant positive influence of human capital development, economic growth, economic openness and oil prices on sustainable energy use. It is further shown that decreasing carbon emissions and making sustainable energy more affordable should be on the central agenda of policymaking for promoting environmental sustainability. A multi-lever strategy is needed when making environmental policies while distributional heterogeneity should also be considered.

Suggested Citation

  • Hondroyiannis, George & Papapetrou, Evangelia & Tsalaporta, Pinelopi, 2024. "Sustainable energy consumption and finance in the presence of risks: Towards a green economy," Renewable Energy, Elsevier, vol. 237(PA).
    • Handle: RePEc:eee:renene:v:237:y:2024:i:pa:s0960148124016331
    DOI: 10.1016/j.renene.2024.121565
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    More about this item

    Keywords

    Economic and financial risks; Sustainable energy consumption; Panel model estimation; Local projection approach;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • F64 - International Economics - - Economic Impacts of Globalization - - - Environment
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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