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What Are the Main Determinants of Renewable Energy Consumption? A Panel Threshold Regression Approach


Most of the countries attempt to decarbonize their energy sector by increasing the share of renewable energy in their total energy consumption because of severe environmental impacts associated with the use of non-renewable energy sources. In this study, our main aim is to understand the determinants of renewable energy consumption for 75 countries over the period from 1990 to 2012. Our analysis is based on a panel threshold regression model to find out asymmetric behaviour of renewable energy. In our model, we try to explain the renewable energy consumption by Gross Domestic Product per capita, Greenhouse Gas emissions, energy imports, energy use, trade openness, urbanization and consumer price index as a proxy for energy prices in a nonlinear framework. We expect positive effects of all the factors considered. When the threshold variable is chosen as GDP per capita, the preliminary results show that for the GDP per capita lower than 10572, all the variables except GDP per capita significantly and positively affect the renewable energy consumption. However, for the upper regime, GDP per capita and energy use have negative and significant impacts. This verifies the asymmetric relationship in this model.


Gülsüm Akarsu– The presenter received PhD. degree in Economics, METU, Ankara, Turkey, in 2013. Main research area is Energy Economics.