Energy mix diversification in emerging economies: An econometric analysis of determinants

Energy mix diversification (EMD) is recognized as a plausible strategy for emerging economies to achieve energy security targets and meet net zero carbon emissions goals by 2050. Thus, this research explores the determinants of EMD utilizing a sample panel for seven major emerging (E7) economies, including Brazil, China, India, Indonesia, Mexico, Russia, and Turkey, observed from 1995 to 2018. The Pedroni panel cointegration test investigates the long-run equilibrium, and the long- and short-run determinants are identified using a panel autoregressive distributed lag model. The findings reveal a long-run equilibrium linkage among EMD, carbon emissions, financial development, economic growth, technological progress, energy efficiency, and globalization. The long-run estimates show that energy efficiency and carbon emissions are driving forces for EMD, whereas technological progress, financial development, and globalization have insignificant effects. However, all variables - except economic growth are found to be the barriers to EMD in the short-run. The findings presented in this research are novel and add value to the energy literature by identifying the long- and short-run determinants of EMD, specifically for E7 economies. These economies are expected to take appropriate actions to stimulate the adoption of clean and green energy sources; thus, appropriate implications of the findings are discussed.