Oil Price Shocks and Renewable Energy Transition: Empirical evidence from net oil-importing South Asian economies

This paper makes a novel attempt to model the non-linear association between renewable energy consumption and crude oil prices across four net oil-importing South Asian economies namely Bangladesh, India, Pakistan and Sri Lanka. Using annual data from 1990 to 2018, the results from the panel data regression analyses confirm the non-linear nexus and show that although rising crude oil prices do not facilitate renewable energy consumption initially, in the latter phases higher crude oil prices are associated with higher levels of renewable energy consumption. The similar non-linearity is also confirmed in the context of the renewable energy share in total final energy consumption and crude oil prices. Moreover, the nexus between renewable electricity share in aggregate electricity output and crude oil prices is also found to be non-linear in nature. However, rising crude oil prices were not found to enhance the share of renewable electricity. The causality results, overall, implicates that movements crude oil prices do influence the renewable energy transition within the concerned South Asian economies. Thus, these results impose critically important policy implications with respect to attainment of energy security and environmental sustainability across South Asia, particularly via reducing the imported crude oil-dependencies of these nations.