The role of renewable energy finance in achieving low-carbon growth:

Abstract

Although switching from non-renewable to renewable energy is believed to stimulate low-carbon economic growth, the means to establishing this energy transition have largely remained unexplored in the extant literature. Against this backdrop, this study focuses on evaluating how scaling public investment in renewable energy-related research and development projects impacts the carbon productivity levels in the top-10 renewable energy-investing countries. The estimation strategy comprised econometric methods that can handle cross-sectional dependency and slope heterogeneity related concerns in the data. Regarding the key findings, higher public research and development-related investments in renewable energy are observed to boost carbon productivity levels in the concerned countries, while natural resource consumption and net exports are found to reduce carbon productivity. Besides, the results endorsed that public research and development investment for renewable energy development exhibits a moderating role by jointly boosting carbon productivity with higher natural resource consumption and net exports. Moreover, it is also seen to inflict a mediating effect by jointly boosting carbon productivity with urbanization. In line with these findings, the concerned governments are recommended to scale such investment in order to stimulate technological innovation so that renewable energy transition can take place to establish low carbon economic growth.