Exploring the role of technological innovation and fertility on energy intensity: Is a fresh narrative unfolding?

Amid the transition to sustainable energy systems, understanding the drivers of energy intensity is essential for informed policymaking. This paper investigates the influence of technological innovation and demographic dynamics on energy intensity across 27 OECD countries from 1990 to 2022, offering novel policy insights. Employing a multifaceted empirical strategy, we utilize dynamic common correlated effects (DCCE) estimators to address cross-sectional dependence and slope heterogeneity, both salient features of our dataset characterized by interdependent units. The empirical findings indicate that technological innovation significantly reduces energy intensity through improvements in efficiency and the adoption of cleaner technologies. Economic openness and GDP per capita are linked to lower energy intensity, underscoring the role of trade and wealth in driving energy efficiency. Conversely, higher fertility rates are linked to increased energy intensity, reflecting population growth and greater demand for energy-intensive services. Quantile regressions uncover heterogeneity across the distribution, with stronger effects of technological innovation and credit access at specific quantiles. We find that fertility positively influences energy intensity across most of the distribution, with the effect diminishing at the upper quantiles—highlighting that higher fertility is associated with increased energy consumption primarily at lower and middle levels of energy intensity. Promoting technological innovation and financial access, while accounting for demographic pressures, is essential for achieving sustainable energy transitions in developed economies.