The impacts of development on energy transition

Energy transitions during the 21st century will include a shift away from fossil fuels towards renewable energy sources. Many countries, however, will follow very different decarbonization paths, making it important to understand the long-run structural factors behind these differences for effective and equitable climate policy. This research examines how country-level development, as measured by the Human Development Index (HDI), relates to energy transition. A historical disease prevalence index is used as an instrumental variable to overcome causal challenges between development and energy transition variables. Our results indicate that development levels are positively associated with shifts toward renewable energy usage in both electricity and primary energy usage. These trends become particularly strong after global climate agreements (Kyoto Protocol and Paris Agreement). When countries are grouped by HDI and income (GDP), low HDI-GDP countries are more fossil energy dependent with development compared to high HDI-GDP countries. This result points to the importance of matching energy-transition policies with development capacity as de-carbonization proceeds differentially across countries around the world.