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Unveiling the green revolution: Exploring the impact of outward FDI, green transition, governance quality, and industrial structure on renewable energy penetration

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  • Haseeb, Mohammad
  • Shuaib, Mohd
  • Emran Hossain, Md
  • Fan, Fei

Abstract

The escalating global demand for sustainable energy solutions underscores the urgent need to understand the drivers of renewable energy adoption, aligning closely with Sustainable Development Goal 7 (SDG 7). Hence, this study explores how outward foreign direct investment (FDI), green transition strategies, industrial activity, urbanization, and governance quality shape green energy penetration across five developed European economies between 2000 and 2022. Employing the CS-ARDL method, the results indicate that outward FDI, effective governance, and green transition initiatives enhance the renewable energy penetration. At the same time, rapid industrial growth and urban expansion tend to hinder it. Causality tests reveal that outward FDI, industrial growth, and urbanization have a one-way effect on renewable energy use. In contrast, governance quality and green transitions share a two-way relationship with renewable energy penetration. The findings highlight the critical role of institutional strength and international investment in promoting renewable energy. Policymakers are encouraged to prioritize strong governance frameworks and environmentally aligned FDI strategies, while integrating sustainability into urban and industrial planning to support a broader green energy shift.

Suggested Citation

  • Haseeb, Mohammad & Shuaib, Mohd & Emran Hossain, Md & Fan, Fei, 2026. "Unveiling the green revolution: Exploring the impact of outward FDI, green transition, governance quality, and industrial structure on renewable energy penetration," Renewable Energy, Elsevier, vol. 256(PH).
    • Handle: RePEc:eee:renene:v:256:y:2026:i:ph:s0960148125022189
    DOI: 10.1016/j.renene.2025.124554
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