Energy intensive growth and the transition pathways: Insights into the role of renewable energy and open market conditions in developing countries

This study examines the impact of economic growth, renewable energy consumption, and open market conditions on energy intensity across 34 developing countries from 1999 to 2022 using the method of moments quantile regression. By analysing how these factors influence energy intensity across different quantiles, the study provides insights into the heterogeneous nature of these relationships. The results reveal a positive and statistically significant impact of economic growth per capita on energy intensity across all quantiles, with a more substantial effect at higher energy intensity levels. However, the squared term of economic growth per capita exhibits a negative and significant influence, confirming the presence of an inverted U-shaped relationship. Renewable energy consumption reduces energy intensity significantly across all quantiles, with more potent effects at higher quantiles. This indicates that economies with higher energy intensity benefit more from transitioning to renewable energy sources. Market freedom initially contributes to higher energy intensity. However, its impact diminishes at higher quantiles, suggesting that while economic liberalisation may increase energy consumption in the short run, it can promote efficiency improvements over time. These findings highlight the need for differentiated policy approaches, where economies with lower energy intensity focus on balanced growth strategies. In comparison, those with higher energy intensity prioritise aggressive renewable energy integration and efficiency-enhancing policies. The study underscores the importance of adopting tailored energy policies that consider the varying impacts of economic and policy variables across different energy intensity levels to achieve sustainable energy transitions.