Renewable Energy Consumption, Income, CO2 Emissions and Oil Prices in G7 Countries: The Importance of Asymmetries

This paper investigates the asymmetric transmission of income, carbon emissions and oil prices to renewable energy consumption for the long-run and short-run in G7 countries using quarterly data over the period from 1955Q1 to 2014Q4. We employ the nonlinear ARDL (NARDL) model to test for the long-run and short-run sensitivity of renewable energy consumption to its determinants. We find that income significantly influences renewable energy consumption in a symmetric manner in the long-run for the US, UK, France and Germany and in an asymmetric manner in Japan. However, renewable energy consumption is found to be insensitive to income in the long-run for Italy. Renewable energy consumption is positively and symmetrically affected by carbon emissions in the long-run for USA, France, Germany, Japan and Italy. Carbon emissions impact renewable energy consumption in an asymmetric manner for Canada but insignificant for the UK in the long-run. In the long-run, oil prices influence renewable energy consumption in an asymmetric manner in USA, symmetrically in the UK and France but insignificantly in Canada, Germany, Japan and Italy. Given the need to establish a global green energy environment our findings have important implications for energy policy makers in the world.