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Asymmetric effects of environmental taxes on renewable energy: Evidence from developing countries

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  • Zaiane, Sedki

Abstract

This study investigates the relationship between environmental taxes and renewable energy in developing economies over the period 2000–2022, using quantile regression (QR) and quantile-on-quantile regression (QQR). While QR results reveal that the effect of environmental taxes is heterogeneous across the renewable energy distribution— showing a negligible impact at low quantiles, positive at median and higher quantiles—the QQR analysis shows that these effects also vary with the intensity of taxation itself. This dual methodological approach uncovers both one-sided and joint heterogeneity, offering a more nuanced understanding of fiscal instruments in the energy transition. Policy implications suggest that early-transition economies should prioritize investment support, subsidies, and green finance, while environmental taxation becomes increasingly powerful as renewable adoption advances.

Suggested Citation

  • Zaiane, Sedki, 2025. "Asymmetric effects of environmental taxes on renewable energy: Evidence from developing countries," Finance Research Letters, Elsevier, vol. 86(PE).
    • Handle: RePEc:eee:finlet:v:86:y:2025:i:pe:s1544612325020185
    DOI: 10.1016/j.frl.2025.108764
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    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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