Are shocks to renewable energy consumption permanent or temporary? Evidence from 54 developing and developed countries

Demir, Ender; Gözgor, Giray

Are shocks to renewable energy consumption permanent or temporary? Evidence from 54 developing and developed countries

2018

Demir, Ender | Gözgor, Giray

The renewable energy sources are considered as the important factor to decrease the level of carbon emissions and to promote the global green economy. Understanding the dynamics of renewable energy consumption, this paper analyzes whether there is a unit root in renewable energy consumption in 54 countries over the period 1971–2016. To this end, the unit root test of Narayan–Popp with two endogenous (unknown) breaks is implemented. The paper finds that renewable energy consumption series are stationary around a level and the time trend in 45 of 54 countries. In other words, renewable energy consumption follows a unit root process only in nine countries: Brazil, China, Colombia, India, Israel, Japan, the Netherlands, Spain, and Turkey. The evidence implies that renewable energy demand policies, which aimed to decrease the carbon emissions, will only have permanent effects in those nine countries.

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