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Does energy efficiency and trade openness matter for energy transition? Empirical evidence for countries in the Organization for Economic Co-operation and Development

Author

Listed:
  • Tiago Lopes Afonso

    (University of Beira Interior)

  • António Cardoso Marques

    (University of Beira Interior
    NECE-UBI)

  • José Alberto Fuinhas

    (NECE-UBI
    University of Coimbra)

Abstract

An energy transition is currently underway around the world, in response to the objectives laid out by international agreements. Since the Kyoto protocol and the Paris agreement, countries have been making considerable efforts to replace fossil fuels with alternative sources in the electricity generation mix. The energy transition of each country depends on their starting point, so international agreements on their own, may not be effective in speeding up the transition. In this paper, two energy transition metrics are calculated: clean-energy transition and low-carbon-energy transition. The clean-energy transition describes the transition from fossil to renewable sources, while the low-carbon-energy transition represents the transition from fossil to renewable and nuclear power sources. This paper aims to examine the determinants of energy transition in countries of the Organization for Economic Co-operation and Development over a long-time span, from 1971 to 2016. Feasible Generalized Least Squares (FGLS) and Panel-corrected Standard Errors (PCSE) estimators were applied to deal with heteroskedasticity and cross-sectional dependence phenomena. Generally, the results show that energy security and the carbon-intensity of energy consumption are obstructing a low-carbon transition. Energy-efficiency and trade-openness are driving the energy transition, while the carbon-intensity of energy consumption is constraining it. Energy efficiency measures are needed to accelerate the energy transition, by reducing the use of fossil fuels.

Suggested Citation

  • Tiago Lopes Afonso & António Cardoso Marques & José Alberto Fuinhas, 2021. "Does energy efficiency and trade openness matter for energy transition? Empirical evidence for countries in the Organization for Economic Co-operation and Development," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(9), pages 13569-13589, September.
    • Handle: RePEc:spr:endesu:v:23:y:2021:i:9:d:10.1007_s10668-021-01228-z
    DOI: 10.1007/s10668-021-01228-z
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