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Some factors of energy aid volatility across developing countries: A special focus on renewable sector

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  • Jain, Panika
  • Bardhan, Samaresh

Abstract

Energy aid effectiveness is paramount for the timely achievement of Sustainable Development Goals (SDG)-7. However, the volatility of energy aid reduces its effectiveness. Given this, the paper empirically investigates the determinants of energy aid volatility and its renewable energy generation (REG) component for 76 aid-recipient countries during 2002–2019. By considering recipient and donor-specific factors, we also explore the linkages of all these factors with the direction of volatility, i.e., aid shortfalls and windfalls. Findings reveal that variations in energy/REG aid volatility reflect the recipient's macroeconomic and institutional characteristics more than donor-specific factors. Moreover, the impacts of all these factors vary across aid shortfalls and windfalls. Specifically, economic prosperity and aid dependency increase energy/REG aid volatility, infused by different directions of aid shocks. Contrarily, oil rents, political stability, and strong democracy reduce aid volatility. Multilateral donors provide more stable funding compared to bilateral donors. We also observe that donors provide stable REG aid in countries with inadequate renewable policies and clean development mechanism funding, playing a catalyst role in supporting institutionally weak countries in the renewable sector. We draw certain policy implications for donors and recipients to manage and mitigate the adverse consequences of volatile energy aid flows.

Suggested Citation

  • Jain, Panika & Bardhan, Samaresh, 2023. "Some factors of energy aid volatility across developing countries: A special focus on renewable sector," Energy Policy, Elsevier, vol. 178(C).
    • Handle: RePEc:eee:enepol:v:178:y:2023:i:c:s0301421523001817
    DOI: 10.1016/j.enpol.2023.113596
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    References listed on IDEAS

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    1. Dang, Hai-Anh & Knack, Stephen & Rogers, F. Halsey, 2013. "International aid and financial crises in donor countries," European Journal of Political Economy, Elsevier, vol. 32(C), pages 232-250.
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    1. Giganti, Patrizio & Barra, Cristian & Falcone, Pasquale Marcello, 2025. "Unveiling the nexus of institutional quality and renewable energy utilizing a Topic Modelling approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 214(C).
    2. Yahya, Farzan & Lee, Chien-Chiang, 2025. "Unveiling the multifaceted role of climate readiness in stabilizing renewables integration: Evidence of energy transition dynamics from a multi-theoretical perspective," Renewable Energy, Elsevier, vol. 248(C).
    3. Firtescu, Bogdan Narcis & Bostan, Ionel & Grosu, Maria & Droj, Laurențiu & Mihalciuc, Camelia Catalina, 2025. "Increasing the share of renewable energy sources (RESs) in the specific portfolio by using the taxation mechanism: Study at the level of EU states," Economic Analysis and Policy, Elsevier, vol. 85(C), pages 1534-1549.
    4. Chen, Yuzhu & Guo, Weimin & Lund, Peter D. & Du, Na & Yang, Kun & wang, Jun, 2024. "Configuration optimization of a wind-solar based net-zero emission tri-generation energy system considering renewable power and carbon trading mechanisms," Renewable Energy, Elsevier, vol. 232(C).
    5. Bashir, Muhammad Farhan & Jamaani, Fouad & Wang, Jue & Huang, Huan, 2026. "Analyzing the dynamic impact of energy aid on energy transition in South Asia: Policy implications for renewable adaptive capacity and energy decarbonization," Research in International Business and Finance, Elsevier, vol. 81(C).
    6. Muhammad Farhan Bashir & Fouad Jamaani & Jue Wang & Huan Huang, 2026. "Examining the Role of Energy Aid, Energy Efficiency and Human Development in Climate Change Mitigation: Policy Implications for Sustainable Development in Emerging African Economies," Sustainable Development, John Wiley & Sons, Ltd., vol. 34(1), pages 768-784, February.

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    Keywords

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    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • 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
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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