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Insufficiency of renewable energy. How do the transition to green energy economies and foreign direct investment affect energy poverty in Europe?

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  • Soto, Gonzalo H.
  • Nghiem, Xuan-Hoa
  • Martinez-Cobas, Xavier

Abstract

We analyze the relationships among the main European energy policies within the context of the green transition and foreign direct investment (FDI) in relation to energy poverty. By employing robust estimators, we determine that there is an insufficient effect of renewable energy penetration in the European Union from 2004 to 2022. This trend is further confirmed by the analysis of energy productivity. Abrupt increases in income levels or demographic dispersion also contribute to the rise of energy poverty. On the other hand, higher overall energy penetration reduces energy poverty. Additionally, both inward foreign direct investment from eurozone countries and outward foreign direct investment to eurozone countries help alleviate the pressure on energy demand, thereby reducing energy poverty.

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  • Soto, Gonzalo H. & Nghiem, Xuan-Hoa & Martinez-Cobas, Xavier, 2025. "Insufficiency of renewable energy. How do the transition to green energy economies and foreign direct investment affect energy poverty in Europe?," Energy, Elsevier, vol. 320(C).
    • Handle: RePEc:eee:energy:v:320:y:2025:i:c:s0360544225009922
    DOI: 10.1016/j.energy.2025.135350
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