The impact of renewable energy and energy transitions index on climate change

Document Type : Research Paper

Authors

Assistant Professor of Agricultural Planning, Economic and Rural Development Research Institute (APERDRI), Tehran, Iran

Abstract

Considering that fossil fuels are the initial source of carbon emission in today's industrialized world, a successful transition to clean energy is essential in order to mitigate the effects of climate change. In this context, the World Economic Forum created the Energy Transition Index (ETI) intending to perform an all-encompassing analysis of the ongoing energy transition across the globe. In this study, the impact of variables such as economic growth, urbanization growth rate, industry structure, as well as the ETI, and the amount of renewable energy consumption on climate change in Iran has been investigated using the SVAR model for 2000-2020. The necessary data were obtained from the World Bank, the Central Bank of the Islamic Republic of Iran, the Iranian Statistical Center, and the Ministry of Energy. The study's findings revealed that economic growth, urbanization, and industrial structure had a positive ETI, and renewable energy negatively affected climate change in Iran. The results of this study showed that the ETI had a more substantial effect on reducing greenhouse gas(GHG) emissions than renewable energy. Considering the greater importance of the ETI on climate change compared to the amount of use of renewable energy and also the multidimensionality of this index, it can be stated that energy policies do not act individually, but react to macro-economic, institutional, social, and geopolitical considerations.

Keywords

Main Subjects


Abidoye, B.O., and Odusola, A.F. 2015. Climate Change and Economic Growth in Africa: An Econometric Analysis. Journal of African Economies. 24(2), 277-301.
Acaroğlu, H., and Güllü, M. 2022. Climate change caused by renewable and non-renewable energy consumption and economic growth: A time series ARDL analysis for Turkey. Renewable Energy. 193, 434-447.
Adebayo, T.S., and Kirikkaleli, D. 2021. Impact of renewable energy consumption, globalization, and technological innovation on environmental degradation in Japan: application of wavelet tools. Environment, Development and Sustainability. 23(11), 16057-16082.
Afshan, S., Ozturk, I., and Yaqoob, T. 2022. Facilitating renewable energy transition, ecological innovations and stringent environmental policies to improve ecological sustainability: Evidence from MM-QR method. Renewable Energy. 196, 151-160.
Ahlborg, H. 2024. Technological power, complex systems, and boundary objects in global energy transitions [Mini Review]. Frontiers in Human Dynamics. 6, 1-6.
Akan, T. 2023. Investigating renewable energy–climate change nexus by aggregate or sectoral renewable energy use? Environmental Science and Pollution Research. 30(1), 2042-2060.
Alshubiri, F., and Elheddad, M. 2020. Foreign finance, economic growth and CO emissions Nexus in OECD countries. International Journal of Climate Change Strategies and Management. 12(2), 161-181.
Asumadu-Sarkodie, S., and Owusu, P.A. 2017a. The causal effect of carbon dioxide emissions, electricity consumption, economic growth, and industrialization in Sierra Leone. Energy Sources, Part B: Economics, Planning, and Policy. 12(1), 32-39.
Asumadu-Sarkodie, S., and Owusu, P.A. 2017b. A multivariate analysis of carbon dioxide emissions, electricity consumption, economic growth, financial development, industrialization, and urbanization in Senegal. Energy Sources, Part B: Economics, Planning, and Policy. 12(1), 77-84.
Azam, A., Rafiq, M., Shafique, M., Zhang, H., and Yuan, J. 2021. Analyzing the effect of natural gas, nuclear energy and renewable energy on GDP and carbon emissions: A multi-variate panel data analysis. Energy. 219, 119592.
Baiardi, D. 2020. Do sustainable energy policies matter for reducing greenhouse gas emissions? University of Milan Bicocca Department of Economics, Management and Statistics Working Paper (425).
Bocca, R., Ashraf, M., and Jamison, S. 2021. Fostering Effective Energy Transition 2021 Edition. World Economic Forum https://www3. weforum. org/docs/WEF_Fostering_Effective_Energy_Transition_2021. pdf,
Boiciuc, I. 2015. The Effects of Fiscal Policy Shocks in Romania. A SVAR Approach. Procedia Economics and Finance. 32, 1131-1139.
Büyükbaşaran, T., Çebi, C., and Yılmaz, E. 2020. Interaction of monetary and fiscal policies in Turkey. Central Bank Review. 20(4), 193-203.
Chapman, S., Watson, J.E.M., Salazar, A., Thatcher, M., and McAlpine, C. A. 2017. The impact of urbanization and climate change on urban temperatures: a systematic review. Landscape Ecology. 32(10), 1921-1935.
Chatziantoniou, I., Duffy, D., and Filis, G. 2013. Stock market response to monetary and fiscal policy shocks: Multi-country evidence. Economic Modelling. 30, 754-769.
Chen, W., and Lei, Y. 2018. The impacts of renewable energy and technological innovation on environment-energy-growth nexus: New evidence from a panel quantile regression. Renewable Energy. 123, 1-14.
Cherp, A., Vinichenko, V., Jewell, J., Brutschin, E., and Sovacool, B. 2018. Integrating techno-economic, socio-technical and political perspectives on national energy transitions: A meta-theoretical framework. Energy Research & Social Science. 37, 175-190.
Chien, F., Hsu, C.C., Ozturk, I., Sharif, A., and Sadiq, M. 2022. The role of renewable energy and urbanization towards greenhouse gas emission in top Asian countries: Evidence from advance panel estimations. Renewable Energy. 186, 207-216.
Clayton, S., and Karazsia, B. T. 2020. Development and validation of a measure of climate change anxiety. Journal of Environmental Psychology. 69, 101434.
Copiello, S., and Grillenzoni, C. 2020. Economic development and climate change. Which is the cause and which the effect? Energy Reports. 6, 49-59.
Creutzig, F., Niamir, L., Bai, X., Callaghan, M., Cullen, J., Díaz-José, J., Figureueroa, M., Grubler, A., Lamb, W.F., Leip, A., Masanet, E., Mata, É., Mattauch, L., Minx, J.C., Mirasgedis, S., Mulugetta, Y., Nugroho, S.B., Pathak, M., Perkins, P., . . . Ürge-Vorsatz, D. 2022. Demand-side solutions to climate change mitigation consistent with high levels of well-being. Nature Climate Change. 12(1), 36-46.
Devi, S., and Gupta, N.2019. Effects of inclusion of delay in the imposition of environmental tax on the emission of greenhouse gases. Chaos, Solitons & Fractals. 125, 41-53.
Ding, Q., Huang, J., and Zhang, H. 2022. Time-frequency spillovers among carbon, fossil energy and clean energy markets: The effects of attention to climate change. International Review of Financial Analysis. 83, 102222.
Dong, K., Jiang, Q., Shahbaz, M., and Zhao, J. 2021. Does low-carbon energy transition mitigate energy poverty? The case of natural gas for China. Energy Economics. 99, 105324.
Esfahani, S.M. J. 2022. Ranking wheat-producing provinces of Iran based on eco-efficiency. Environmental Resources Research. 10(1), 81-92.
Esfahani, S.M.J., and Rafati, M. 2022. The share of farm-scale on optimizing energy consumption and greenhouse gas emissions in irrigated wheat farms in eastern Iran. Sustainable Energy Technologies and Assessments. 53, 102465.
Esfandiari, M., Mirzaei Khalilabad, H.R., Boshrabadi, H.M., and Mehrjerdi, M.R.Z. 2020. Factors influencing the use of adaptation strategies to climate change in paddy lands of Kamfiruz, Iran. Land Use Policy. 95, 104628.
Esmaeili, P., and Rafei, M. 2021. Dynamics analysis of factors affecting electricity consumption fluctuations based on economic conditions: Application of SVAR and TVP-VAR models. Energy. 226, 120340.
Espinosa Valderrama, M., Cadena Monroy, Á. I., and Behrentz, E. 2019. Challenges in greenhouse gas mitigation in developing countries: A case study of the Colombian transport sector. Energy Policy. 124, 111-122.
Finn, B.M., and Cobbinah, P.B. 2022. African urbanisation at the confluence of informality and climate change. Urban Studies. 60(3), 405-424.
Garschagen, M., and Romero-Lankao, P. 2015. Exploring the relationships between urbanization trends and climate change vulnerability. Climatic Change. 133(1), 37-52.
Ghouchani, M., Taji, M., Cheheltani, A.S., and Chehr, M.S. 2021. Developing a perspective on the use of renewable energy in Iran. Technological Forecasting and Social Change. 172, 121049.
Hu, K., Sinha, A., Tan, Z., Shah, M.I., and Abbas, S. 2022. Achieving energy transition in OECD economies: Discovering the moderating roles of environmental governance. Renewable and Sustainable Energy Reviews. 168, 112808.
IEA. 2020. Global CO2 Emissions in 2019. IEA.
Jahanger, A., Yang, B., Huang, W.C., Murshed, M., Usman, M., and Radulescu, M. 2023. Dynamic linkages between globalization, human capital, and carbon dioxide emissions: empirical evidence from developing economies. Environment, Development and Sustainability. 25(9), 9307-9335.
Jeon, H. 2022. Renewable versus non-renewable: The role of electricity generation to economic growth. The Electricity Journal. 35(6), 107140.
Kahn, M.E., Mohaddes, K., Ng, R.N.C., Pesaran, M.H., Raissi, M., and Yang, J.C. 2021. Long-term macroeconomic effects of climate change: A cross-country analysis. Energy Economics. 104, 10564.
Kardooni, R., Yusoff, S.B., Kari, F.B., and Moeenizadeh, L. 2018. Public opinion on renewable energy technologies and climate change in Peninsular Malaysia. Renewable Energy. 116, 659-668.
Khan, S., Murshed, M., Ozturk, I., and Khudoykulov, K. 2022. The roles of energy efficiency improvement, renewable electricity production, and financial inclusion in stimulating environmental sustainability in the Next Eleven countries. Renewable Energy. 193, 1164-1176.
Khan, Z., Ali, M., Kirikkaleli, D., Wahab, S., and Jiao, Z. 2020. The impact of technological innovation and public-private partnership investment on sustainable environment in China: Consumption-based carbon emissions analysis. Sustainable Development. 28(5), 1317-1330.
Lee, H.S., Arestis, P., Chong, S.C., Yap, S., and Sia, B. K. 2022. The heterogeneous effects of urbanisation and institutional quality on greenhouse gas emissions in Belt and Road Initiative countries. Environmental Science and Pollution Research. 29(1), 1087-1105.
Lehmann, J., Cowie, A., Masiello, C.A., Kammann, C., Woolf, D., Amonette, J.E., Cayuela, M.L., Camps-Arbestain, M., and Whitman, T. 2021. Biochar in climate change mitigation. Nature Geoscience. 14(12), 883-892.
Leitão, N.C., and Lorente, D.B. 2020. The Linkage between Economic Growth, Renewable Energy, Tourism, CO2 Emissions, and International Trade: The Evidence for the European Union. Energies. 13(18), 4838.
Li, G., Fang, C., Wang, S., and Sun, S. 2016. The Effect of Economic Growth, Urbanization, and Industrialization on Fine Particulate Matter (PM2.5) Concentrations in China. Environmental Science & Technology. 50(21), 11452-11459.
Li, X., Stringer, L.C., and Dallimer, M. 2022. The Impacts of Urbanisation and Climate Change on the Urban Thermal Environment in Africa. Climate, 10(11).
Lin, B., and Zhu, J. 2019. The role of renewable energy technological innovation on climate change: Empirical evidence from China. Science of The Total Environment. 659, 1505-1512.
Liu, X., and Bae, J. 2018. Urbanization and industrialization impact of CO2 emissions in China. Journal of cleaner production. 172, 178-186.
Maheshwari, B., Pinto, U., Akbar, S., and Fahey, P. 2020. Is urbanisation also the culprit of climate change? – Evidence from Australian cities. Urban Climate. 31, 100581.
Mansouri Daneshvar, M.R., Ebrahimi, M., and Nejadsoleymani, H. 2019. An overview of climate change in Iran: facts and statistics. Environmental Systems Research. 8(1), 7.
Mohammed, M.U., Hassan, N.I., and Badamasi, M.M. 2019. In search of missing links: urbanisation and climate change in Kano Metropolis, Nigeria. International Journal of Urban Sustainable Development. 11(3), 309-318.
Mokhtara, C., Negrou, B., Settou, N., Settou, B., and Samy, M.M. 2021. Design optimization of off-grid Hybrid Renewable Energy Systems considering the effects of building energy performance and climate change: Case study of Algeria. Energy. 219, 119605.
Muellner, N., Arnold, N., Gufler, K., Kromp, W., Renneberg, W., and Liebert, W. 2021. Nuclear energy - The solution to climate change? Energy Policy. 155, 112363.
Murshed, M., Khan, U., Khan, A.M., and Ozturk, I. 2023. Can energy productivity gains harness the carbon dioxide-inhibiting agenda of the Next 11 countries? Implications for achieving sustainable development. Sustainable Development. 31(1), 307-320.
Nam, E., and Jin, T. 2021. Mitigating carbon emissions by energy transition, energy efficiency, and electrification: Difference between regulation indicators and empirical data. Journal of Cleaner Production. 300, 126962.
Nasir, M.A., Duc Huynh, T.L., and Xuan Tram, H.T. 2019. Role of financial development, economic growth and foreign direct investment in driving climate change: A case of emerging ASEAN. Journal of Environmental Management. 242, 131-141.
Neofytou, H., Nikas, A., and Doukas, H. 2020. Sustainable energy transition readiness: A multicriteria assessment index. Renewable and Sustainable Energy Reviews. 131, 109988.
Nyberg, R.A. 2018. Using ‘smartness’ to reorganise sectors: Energy infrastructure and information engagement. International Journal of Information Management. 39, 60-68.
Ogwu, M.C. 2019. Towards Sustainable Development in Africa: The Challenge of Urbanization and Climate Change Adaptation. In P. B. Cobbinah & M. Addaney (Eds.), The Geography of Climate Change Adaptation in Urban Africa (pp. 29-55). Springer International Publishing.
Omrani, H., Valipour, M., and Emrouznejad, A. 2019. Using Weighted Goal Programming Model for Planning Regional Sustainable Development to Optimal Workforce Allocation: An Application for Provinces of Iran. Social Indicators Research. 141(3), 1007-1035.  
Owusu, P.A., and Asumadu-Sarkodie, S. 2016. A review of renewable energy sources, sustainability issues and climate change mitigation. Cogent Engineering. 3(1), 1167990.
Pan, B., Adebayo, T.S., Ibrahim, R.L., and Al-Faryan, M.A.S. 2023. Does nuclear energy consumption mitigate carbon emissions in leading countries by nuclear power consumption? Evidence from quantile causality approach. Energy and Environment. 34(7), 2521-2543.
Pei, X., Wu, J., Xue, J., Zhao, J., Liu, C., and Tian, Y. 2022. Assessment of Cities’ Adaptation to Climate Change and Its Relationship with Urbanization in China. Sustainability. 14(4), 2184.
Ren, G.Y. 2017. Urbanization as a major driver of urban climate change. Advances in Climate Change Research. 6(1), 1-6.
Restrepo-Ángel, S., Rincón-Castro, H., and Ospina-Tejeiro, J. J. 2022. Multipliers of taxes and public spending in Colombia: SVAR and local projections approaches. Latin American Journal of Central Banking. 3(3), 100070.
Sanaeepur, S., Sanaeepur, H., Kargari, A., and Habibi, M.H. 2014. Renewable energies: climate-change mitigation and international climate policy. International Journal of Sustainable Energy. 33(1), 203-212.
Santillán Vera, M., García Manrique, L., Rodríguez Peña, I., and De La Vega Navarro, A. 2023. Drivers of electricity GHG emissions and the role of natural gas in mexican energy transition. Energy Policy. 173, 113316.
Sarkodie, S.A., Adams, S., and Leirvik, T. 2020. Foreign direct investment and renewable energy in climate change mitigation: Does governance matter? Journal of Cleaner Production. 263, 121262.
Schwab, J., and Combariza Diaz, N.C. 2023. The discursive blinkers of climate change: Energy transition as a wicked problem. The Extractive Industries and Society. 15, 101319.
Shafiezadeh, M.A., Tavanpour, M., Amini, F., Ghahramani, N., Saberfattahi, L., and Soleimanpour, P. 2022. Iran and World Energy Facts and Figureures. 2019.
Shahsavari, A., Yazdi, F.T., and Yazdi, H.T. 2019. Potential of solar energy in Iran for carbon dioxide mitigation. International Journal of Environmental Science and Technology. 16(1), 507-524.  
Shang, Y., Sang, S., Tiwari, A.K., Khan, S., and Zhao, X. 2024. Impacts of renewable energy on climate risk: A global perspective for energy transition in a climate adaptation framework. Applied Energy. 362, 122994.
Singh, A., Lal, S., Kumar, N., Yadav, R., and Kumari, S. 2023. Role of nuclear energy in carbon mitigation to achieve United Nations net zero carbon emission: evidence from Fourier bootstrap Toda-Yamamoto. Environmental Science and Pollution Research. 30(16), 46185-46203.
Singh, H. V., Bocca, R., Gomez, P., Dahlke, S., and Bazilian, M. 2019. The energy transitions index: An analytic framework for understanding the evolving global energy system. Energy Strategy Reviews. 26, 100382.
Sun, Y., Li, H., Andlib, Z., and Genie, M.G. 2022. How do renewable energy and urbanization cause carbon emissions? Evidence from advanced panel estimation techniques. Renewable Energy. 185, 996-1005.
Wang, C., Raza, S.A., Adebayo, T S., Yi, S., and Shah, M.I. 2023. The roles of hydro, nuclear and biomass energy towards carbon neutrality target in China: A policy-based analysis. Energy. 262, 125303.
Wang, J., Ghosh, S., Olayinka, O.A., Doğan, B., Shah, M.I., and Zhong, K. 2022. Achieving energy security amidst the world uncertainty in newly industrialized economies: The role of technological advancement. Energy. 261, 125265.
Wang, S., Wasif Zafar, M., Vasbieva, D.G., and Yurtkuran, S. 2024. Economic growth, nuclear energy, renewable energy, and environmental quality: Investigating the environmental Kuznets curve and load capacity curve hypothesis. Gondwana Research. 129, 490-504.
Xinyue, L., and Mingxing, C. 2019. Research progress on the impact of urbanization on climate change. Advances in Earth Science. 34(9), 984.
Yang, X., and Khan, I. 2022. Dynamics among economic growth, urbanization, and environmental sustainability in IEA countries: the role of industry value-added. Environmental Science and Pollution Research . 29(3), 4116-4127.
Zhang, X., Aguilar, E., Sensoy, S., Melkonyan, H., Tagiyeva, U., Ahmed, N., Kutaladze, N., Rahimzadeh, F., Taghipour, A., and Hantosh, T. 2005. Trends in Middle East climate extreme indices from 1950 to 2003. Journal of Geophysical Research: Atmospheres. 110(D22).
Zheng, S., Wang, R., Mak, T.M.W., Hsu, S.C., and Tsang, D.C.W. 2021. How energy service companies moderate the impact of industrialization and urbanization on carbon emissions in China? Science of The Total Environment. 751, 141610.
Zheng, X., Streimikiene, D., Balezentis, T., Mardani, A., Cavallaro, F., and Liao, H. 2019. A review of greenhouse gas emission profiles, dynamics, and climate change mitigation efforts across the key climate change players. Journal of cleaner production. 234, 1113-1133.
Zhenmin, L., and Espinosa, P. 2019. Tackling climate change to accelerate sustainable development. Nature Climate Change. 9(7), 494-496.