Effectiveness of renewable energy incentives on sustainability: evidence from dynamic panel data analysis for the EU countries and Turkey.

We aim at analyzing the influence of incentive policies on renewable energy deployment in European Union countries and Turkey over the 2000-2018 period. Applying both panel fixed effect and the dynamic panel estimation methods, we compared the results of these two different techniques. Moreover, we included "net metering" that has not been analyzed before, in our policy toolkit, that includes a large number of incentives. Our data cover longer time series than the previous studies in the literature, and it provides new results of different renewable energy policies and drivers for analyzed countries. Empirical findings show that while grants, Research and Development, tax, certification, and policy support have positive and statistically significant impacts on the renewable energy capacity, direct investments, loan, and net metering instruments have no stimulating effect on the renewable energy deployment. These results indicate the deterrent impact of regulations and direct investments on capacity of electricity generated from renewable energy. Moreover, our estimation results reveal that fossil energy consumption, nuclear energy, and GDP are important drivers of renewable energy deployment while net import (energy security) and CO2 emissions are not. Our study highlights the importance of research and development activities, tax incentives, and efficient policy design in transition to green economy in the countries analyzed. Following the detailed discussion of the results, possible policy implications are presented at the end of the study.

Interrelationships among foreign direct investments, renewable energy, and CO2 emissions for different European country groups: a panel ARDL approach.

This study estimated unbalanced panel data analysis to investigate the relationship among CO2 emissions, GDP, renewable and non-renewable energy utilization, and foreign direct investment (FDI) inflow in 26 European countries. Moreover, we investigated the role of environmental regulations in validation of the pollution haven hypothesis (PHH) in two EU country groups, namely 1-4th and 5th enlargement countries of EU, since their adaptation periods of environmental legislation may indicate differences. Empirical results confirmed the validation of environmental Kuznets curve (EKC) hypothesis and PHH for overall EU countries. However, results differ between country groups in EU. For example, while results confirm the evidence of EKC in 5th enlargement countries, they do not support in 1-4th enlargement countries. Moreover, while environmental regulations do not play an important role in the validity of PHH, they are important factors in the validity of EKC in overall EU countries. Granger causalities showed that economic growth causes energy consumption and FDI inflow. Since renewable energy mitigates the emissions, EU countries should enhance green technology and energy efficiency to ensure sustainable development. What is more, EU countries need to tighten the environmental regulations on FDI inflow. Therefore, our results support the new framework by European Commission on screening the FDI inflows throughout the EU zone.

Do foreign direct investment and renewable energy consumption affect the CO2 emissions? New evidence from a panel ARDL approach to Kyoto Annex countries.

This study examines the impact of foreign direct investment (FDI) and the potential of renewable energy consumption on carbon dioxide (CO2) emissions in 21 Kyoto countries using an unbalanced panel data. For this purpose, Environmental Kuznets Curve (EKC) hypothesis was tested using panel cointegration analysis. Panel causality tests show that there are significant long-run causalities from the variables to carbon emissions, renewable energy consumption, fossil fuel energy consumption and inflow foreign direct investments. The results of our model support the pollution haloes hypothesis which states that FDI brings in clean technology and improves the environmental standards. However, an inverted U-shaped relationship (EKC) was not supported by the estimated model for the 21 Kyoto countries. This means that economic growth cannot ensure environmental protection itself or environmental goals cannot await economic growth. Another important finding is that renewable energy consumption decreases carbon emissions. Based on the empirical results, some important policy implications emerge. Kyoto countries should stimulate the FDI inflows and usage of renewable energy consumption to mitigate the air pollution and meet the emission targets. This paper provides new insights into environment and energy policies through FDI inclusion.