Convergence of clean energy consumption-panel unit root test with sharp and smooth breaks
Yifei Cai1, Angeliki N Menegaki2,3,4
1Economics, Business School, University of Western Australia, Perth, Australia. yifei.cai@research.uwa.edu.au.
Summary
Clean energy consumption trends vary across OECD and emerging economies. Analysis reveals both convergence and divergence, highlighting the impact of policy on clean energy paths and economic sectors.
Area of Science:
- Environmental Economics
- Energy Policy
- Econometrics
Background:
- Global energy markets are increasingly focused on clean energy sources.
- Understanding consumption patterns and their drivers is crucial for sustainable development.
- Previous studies often overlooked the nuances of structural breaks in time-series data.
Purpose of the Study:
- To analyze clean energy consumption trends in 21 OECD and 14 emerging market countries from 1965-2016.
- To investigate the presence and impact of both sharp and smooth breaks on clean energy consumption.
- To explore the economic implications of convergence and divergence in clean energy usage.
Main Methods:
- Panel unit root tests were employed to examine time-series properties.
- Time-varying fitted intercepts were used to model consumption paths.
- Analysis covered a comprehensive period from 1965 to 2016.
Main Results:
- Empirical evidence supports the consideration of both sharp and smooth breaks in clean energy consumption analysis.
- Clean energy consumption shows convergence in 22 out of 35 countries studied.
- Divergence in clean energy consumption was observed in specific countries including the USA, Canada, and China.
Conclusions:
- Structural breaks significantly influence clean energy consumption patterns.
- Policy interventions can lead to lasting changes in clean energy consumption and related economic sectors.
- The findings offer valuable insights for policymakers aiming to promote clean energy adoption.
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