Determinants of renewable energy production in transition economies: A panel data approach

Abstract

Abstract Over the past several years, the analysis of the determinants of renewable energy production has become an increasingly popular topic in academic research and governmental policy around the globe. However, many questions about these factors, especially in the transition economies in Central and Eastern Europe and the Caucasus and Central Asia, remain unanswered. To address this gap, this paper presents novel empirical evidence on the primary economic and political factors shaping transitions to a low carbon economy via renewable energy generation in post-socialist countries. Using extensive data from 27 transition economies over the years 1990–2014, it has been found that higher economic growth and rising level of unemployment and government debt acted as stimulators of renewable energy generation. The implementation of the Kyoto Protocol also led to the significant increase in renewables utilization. Furthermore, increasing CO2 emissions per capita, the implementation of the competition policy and deteriorating competitiveness within the energy market significantly limited production of energy from renewable sources. The findings also suggest that since the beginning of the last global financial crisis in 2007 reinforcement of competition within energy market and additional public funding had a much stronger role to play as factors stimulating renewables deployment.