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Renewable energy consumption and the rising effect of climate policy uncertainty: Fresh policy analysis from China

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  • Huo, Dongxia
  • Bagadeem, Salim
  • Elsherazy, Tarek Abbas
  • Nasnodkar, Siddhesh Prabhu
  • Kalra, Akash

Abstract

A crucial turning point has been achieved in the global energy transition with an increased emphasis on renewable energy sources. This study investigates the time-varying effects of climate policy uncertainty on various types of renewable energy consumption. Initially, we scrutinize the influence of climate policy uncertainty (CPU) on energy consumption by employing the conventional Granger causality test. Our results reveal that CPU insignificantly affects hydroelectric, biomass, and geothermal energy consumption, whereas it significantly affects wind and solar energy. To further understand the dynamic nature of these impacts, we utilize a unique time-varying Granger causality test, incorporating three distinct algorithms. Using a time-varying testing window, we find that CPU exerts an insignificant effect on geothermal energy but produces a significant, albeit discontinuous, effect on other renewable energy sources throughout the sampling period. Furthermore, this study extends its analysis to examine the effect on overall renewable energy consumption. Our investigation highlights the need for decision-makers in each energy sector to account for the potential risks arising due to changes in climate policy over different periods.

Suggested Citation

  • Huo, Dongxia & Bagadeem, Salim & Elsherazy, Tarek Abbas & Nasnodkar, Siddhesh Prabhu & Kalra, Akash, 2023. "Renewable energy consumption and the rising effect of climate policy uncertainty: Fresh policy analysis from China," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 1459-1474.
    • Handle: RePEc:eee:ecanpo:v:80:y:2023:i:c:p:1459-1474
    DOI: 10.1016/j.eap.2023.10.017
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    Keywords

    Granger causality; Time-varying; Renewable energy consumption; Climate policy uncertainty; China;
    All these keywords.

    JEL classification:

    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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