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Investigating the assumption of perfect displacement for global energy transition: panel evidence from 73 economies

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Abstract

This study investigates the extent and efficiency of global energy transition by examining the impact of renewable electricity generation on non-renewable electricity generation in 73 economies from 1990 to 2020. This is done to empirically scrutinise the assumption of perfect displacement as adopted by Intergovernmental Panel on Climate Change and other environmental and economic analysts. The estimated models also control for the effects of globalisation, economic growth, and international crude oil prices. The PMG-ARDL estimation demonstrates that renewable energy is able to partly displace the non-renewable energy and that the global energy transition is far from perfect displacement. More specifically, the coefficient of renewable energy generation is − 0.157, indicating that more than 6 units of alternative energy are necessary for displacing one unit of fossil fuel energy at the global level. However, the findings reveal that globalisation, economic growth, and crude oil prices negatively influence the energy transition by pushing up the non-renewable energy generation. To delve into finer details, the ARDL findings uncover that 1% increase in globalisation, economic growth, and crude oil prices increases the non-renewable energy generation by 0.88%, 0.75%, and 0.03%, respectively. The Driscoll–Kraay and feasible generalised least squares estimation techniques also confirm these baseline findings. Potential policy implications for enhancing the efficiency of global energy transition are also discussed.

Graphical abstract

Global energy transition scenario

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Fig. 1

Source: BP statistics (2022)

Fig. 2

Source: BP statistics (2022)

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Data availability

Data would be made available on reasonable request.

Notes

  1. https://developmenteducation.ie/feature/the-energy-debate-renewable-energy-cannot-replace-fossil-fuels/.

  2. https://www.un.org/en/chronicle/article/role-fossil-fuels-sustainable-energy-system.

  3. “Algeria, Argentina, Australia, Austria, Azerbaijan, Bangladesh, Belarus, Belgium, Brazil, Bulgaria, Canada, Chile, China, Colombia, Croatia, Cyprus, Czech Republic, Denmark, Ecuador, Egypt, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, India, Indonesia, Iran, Iraq, Ireland, Israel, Italy, Japan, Kazakhstan, Kuwait, Latvia, Luxembourg, Malaysia, Mexico, Morocco, Netherlands, New Zealand, North Macedonia, Norway, Oman, Pakistan, Peru, Philippines, Poland, Portugal, Qatar, Romania, Russia, Saudi Arabia, Singapore, South Africa, South Korea, Spain, Sri Lanka, Sweden, Switzerland, Thailand, Trinidad and Tobago, Turkey, Ukraine, United Arab Emirates, United Kingdom, United States of America, Venezuela, Vietnam.”.

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  1. Department of Humanities and Social Sciences, Indian Institute of Technology Kharagpur, West Medinipur, West Bengal, 721302, India

    Kashif Nesar Rather & Mantu Kumar Mahalik

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  1. Kashif Nesar Rather
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Contributions

All authors contributed to the study conception and design. Material preparation, data collection and analysis, and original draft writing were performed by Mr. KNR. The conceptualisation of the study and the review of the original draft were done by Dr. MKM. All authors read and approved the final manuscript.

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Correspondence to Kashif Nesar Rather.

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Rather, K.N., Mahalik, M.K. Investigating the assumption of perfect displacement for global energy transition: panel evidence from 73 economies. Clean Techn Environ Policy 26, 2739–2752 (2024). https://doi.org/10.1007/s10098-023-02689-8

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