Environmental regulations’ impact on clean energy consumption: Under the assistance of governance measures

The drastic change in climate augments the importance of clean energy consumption. Therefore, this paper examines how environmental regulations influence the utilization of clean energy under the moderation of governance measures. The 2-Steps System GMM is applied to 26 OECD countries’ data from 1996 to 2019 to analyze the relationship. Our analysis depicts that environmental regulations and GDP significantly enhance clean energy usage in OECD countries. Moreover, economic globalization insignificantly impacts clean energy consumption. On the contrary, financial development in OECD countries significantly leads to a decrease in the consumption of clean energy because renewable energy projects are long-term and more expensive than non-renewable energy generation projects. This paper further discovers that the majority of the governance measures significantly and positively moderate the connection of environmental regulations with clean energy consumption. Consequently, constructive governance measures facilitate the effective implementation of environmental regulations in OECD countries eventually increasing the consumption of clean energy instead of non-renewable energy. To reduce GHG emissions in the environment, the government should encourage the usage of clean energy in their respective countries. Therefore, policymakers promote the practice of clean energy consumption through stringent environmental regulations and effective governance measures.