Eco-innovation and energy productivity: New determinants of renewable energy consumption

This study provides new empirical evidence on the determinants of renewable energy consumption in the case of OECD economies over the period from 1990 to 2017. To examine the long run relationship among variables of renewable energy consumption and its determinants, this study uses the Durbin Hausman group mean cointegration test. The long-run and short-run coefficients are estimated via the cross-sectional Autoregressive Distributive Lag (CS-ARDL) method. The significant cointegration vector confirms the long-run equilibrium among the variables presented in the model. The results show that income, human capital, energy productivity, energy prices, and eco-innovation are important factors in explaining renewable energy consumption. This study adopts the Augmented Mean Group (AMG) method to check the robustness of the model. The results are found to be consistent with the estimates of the cross-sectional Autoregressive Distributive Lag Model method. To offer viable solutions to environmental problems and to achieve the targets set in the Paris Climate Agreement, policies and strategies should be devised to increase the share of renewable energy in the overall energy mix.