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How does energy aid mitigate the recipient countries’ carbon emissions?

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  • Liu, Yang
  • Dong, Kangyin
  • Taghizadeh-Hesary, Farhad

Abstract

As the global community collectively tackles climate change, energy aid has emerged as a potential solution to reduce carbon dioxide (CO2) emissions in recipient countries. However, the impact and underlying mechanisms of energy aid on CO2 emissions remain uncertain. Accordingly, this study empirically examines the influence of energy aid on CO2 emissions. Analyzing data from 65 nations between 2002 and 2020, we find that energy aid contributes to reducing recipients’ CO2 emissions. A sectoral heterogeneity analysis reveals that this impact primarily stems from aid related to renewable energy generation and energy policies, highlighting the need to optimize the energy aid structure to improve its effectiveness. Additionally, technical and structural effects are identified as the two primary transmission paths to explore the mechanism linking energy aid and carbon emissions. This study confirms the importance of energy aid in mitigating CO2 emissions and provides recommendations for enhancing aid effectiveness.

Suggested Citation

  • Liu, Yang & Dong, Kangyin & Taghizadeh-Hesary, Farhad, 2023. "How does energy aid mitigate the recipient countries’ carbon emissions?," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 359-375.
    • Handle: RePEc:eee:ecanpo:v:79:y:2023:i:c:p:359-375
    DOI: 10.1016/j.eap.2023.06.022
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    More about this item

    Keywords

    CO2 emissions; Energy aid; Heterogeneity; Transmission mechanism;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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