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The Choice between Renewables and Non-renewables: Evidence from Electricity Generation in 29 Countries

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  • Jeremy Nguyen
  • Abbas Valadkhani
  • Gholamreza Hajargasht

Abstract

We examine how per capita income and relative fossil fuel prices influence the use of non-renewables (oil, coal and natural gas), nuclear, hydroelectric, and other renewables in electricity generation. Panel regressions are estimated using the fully modified ordinary least squares method and data across 29 countries (1985-2017).We include both developed and developing economies whose classification status is allowed to vary during the sample period depending on per capita income.Results suggest that oil prices play a dominant role in boosting the use of renewables, while gas serves as a transition fuel. For developing nations, income is a significant constraint in the use of renewables, while coal and gas prices do not significantly influence the use of hydro and nuclear. This finding supports a shift away from the exclusive use of pricing mechanisms towards set targets linked to per capita income to encourage the use of renewables in developing economies.

Suggested Citation

  • Jeremy Nguyen & Abbas Valadkhani & Gholamreza Hajargasht, 2021. "The Choice between Renewables and Non-renewables: Evidence from Electricity Generation in 29 Countries," The Energy Journal, , vol. 42(6), pages 49-68, November.
    • Handle: RePEc:sae:enejou:v:42:y:2021:i:6:p:49-68
    DOI: 10.5547/01956574.42.6.jngu
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