This study examines the impact of key climate change indicators, including maximum temperature, minimum temperature, and precipitation, on inflation uncertainty across tropical and temperate regions. Using data from 53 countries between 1990 and 2020, the analysis applies Panel Structural Vector Autoregression to uncover regional differences. The findings reveal that maximum temperature significantly contributes to inflation uncertainty in tropical regions, while precipitation plays a major role in temperate regions. The study highlights the critical role of renewable energy in reducing climate-induced inflation volatility, particularly in tropical areas. The results emphasize the need for region-specific monetary policies that focus on stabilizing food prices, promoting renewable energy in tropical regions, and strengthening infrastructure resilience and water management in temperate regions. Integrating renewable energy into economic strategies is essential for lowering inflation uncertainty and fostering sustainable growth in the face of climate challenges.
The present study explores spatial spillover effects of PESTLE (Political, economic, social, technological, legal, and environmental) factors on energy transition (ET) across 31 OECD economies from 1996 to 2021. The inverse distance weight matrix (IDWM) is used for advance spatial econometrics analysis. Global Moran’s I and Local Moran’s tests confirm the presence of spatial autocorrelation. The empirical findings of a Spatial Durbin Model reveal that government policies (GP), financial inclusion (FI), human development (HD) and green technological innovations (GTI) create a positive spillover effect and accelerate the pace of energy transition (ET) in home and neighbouring economies. In contrast, ecological footprint (EF) and inflation produce a negative spillover effect and a decline in ET. The study’s insights, aligned with international accords and Sustainable Development Goals (SDGs) 7 and 13, offer vital directions to decision-makers to strengthen the energy transition process and the challenges to a sustainable growth.
Accelerating the global transition to renewable electricity is critical for achieving climate targets, yet progress remains uneven across countries. This study examines the role of political institutional quality in shaping renewable electricity deployment. A review of recent literature identifies key conceptual and empirical gaps. Using a panel of 75 developed and emerging and developing countries from 1990 to 2018, we conduct an in-depth empirical analysis incorporating both composite and disaggregated measures of political institutional quality, alongside the moderating effect of regional political-administrative authority. We further compare the effects of institutional improvements across different development contexts. Our findings indicate that aggregate measures of institutional quality obscure heterogeneous effects among their components. In emerging and developing economies, corruption control is positively associated with renewable electricity deployment, particularly under low to moderate levels of regional authority. Conversely, higher bureaucratic quality may hinder deployment, potentially due to regulatory complexity. In developed countries, democratic accountability emerges as a key driver, especially in moderately decentralized systems. These results underscore the conditional and context-specific nature of institutional effects, suggesting that policy interventions must align institutional reforms with governance structures to effectively support renewable electricity expansion.
The aim of the analysis is to create a database that maps the company-specific energy demand of a commercial area in hourly resolution. The focus is on determining the electricity and heat demand profile of companies in a commercial area using a combination of synthetic and real load profiles. These are necessary to map the heterogeneous energy requirements of industrial and commercial companies in a commercial area as realistically as possible. Due to the limited availability of real consumption data, 323 synthetic electricity and 125 gas load profiles from various studies were used. The comparison shows that synthetic profiles can only reflect the actual requirements of individual companies to a limited extent. However, as the temporal resolution becomes more aggregated and the number of companies increases, the synthetic data approximates the real consumption profile of the entire commercial area. The analysis carried out forms the basis for implementing an energy system model that examines the economic and technical synergies of local energy communities as part of decarbonisation strategies in commercial areas.
Energy poverty remains a pressing challenge in the European Union, with Spain exhibiting one of the highest incidence rates. Despite an ambitious national strategy, over 20% of Spanish households continues to report difficulties maintaining adequate indoor temperatures. This study examines energy poverty dynamics in Spain using longitudinal data from the European Union Statistics on Income and Living Conditions (EU-SILC) covering the period 2004–2023. We distinguish between transient and chronic energy poverty, revealing that 2.6–3.6% of households experience persistent deprivation. Vulnerability is higher among single-person and female-headed households, while education and employment significantly reduce chronic risk. By focusing on household trajectories, this study contributes to a deeper understanding of structural and temporal dimensions of energy poverty, supporting more effective policy design. Spain’s case highlights the limitations of current measures and the need for strategies addressing long-term vulnerability within a just energy transition framework.
In this study, the impact of photovoltaic generation on electricity prices and net consumer benefits is evaluated by accounting for the cost of a feed-in tariff system. A structural model is utilized to estimate electricity prices in a counterfactual scenario in which photovoltaics are not generated, and the results are compared with actual prices to evaluate the consumer economic benefits of photovoltaic adoption. To quantitatively estimate the consumer economic benefit, an empirical analysis is performed by using the data on electricity prices, electricity demand, and photovoltaic generation in Japan. The results indicate positive consumer economic benefits owing to the adoption of photovoltaics in recent years, particularly during the summer, which confirms the theoretical prediction that the net economic benefits from photovoltaics increase with increasing electricity demand and difference between photovoltaic generation and the demand. These results offer practical insight for implementing policies that balance renewable energy expansion with economic feasibility. By applying the insights on consumer economic benefits, policymakers could more accurately adjust the feed-in tariff to balance the cost of photovoltaic installation with the consumer burden.
Social acceptance of low-carbon transport technologies is a crucial but frequently underrepresented dimension in energy system optimization models (ESOMs), despite its potential relevance for the design of effective decarbonization policies. This study examines the role of social acceptability in the transition of the European Union transport sector toward climate neutrality by integrating behavioral factors into the open-source ESOM TEMOA-Europe. In particular, social acceptability is represented through technology-specific hurdle rates, used as proxies for perceived risk and financing barriers, alongside assumptions on declining investment costs for low-carbon vehicle technologies. Four scenarios are developed and compared: (i) a Base scenario, (ii) a scenario with reduced hurdle rates for battery electric and fuel-cell vehicles, (iii) a CostSC scenario with lower investment costs for green truck technologies, and a Net0 scenario (iv) imposing a binding net-zero emissions constraint by 2050. The analysis evaluates these scenarios based on technology uptake, system costs, CO2 emissions, and critical raw material requirements. Results show that, in the passenger car sector, lower perceived risk can substantially accelerate electrification and achieve emissions reductions comparable to those obtained under stringent regulatory constraints, in some cases at lower overall system cost. By contrast, the freight sector appears considerably less responsive to such demand-side measures, indicating the need for stronger regulatory intervention. The findings also highlight that deep transport decarbonization implies a substantial increase in demand for critical raw materials, reinforcing the importance of complementary recycling and supply-chain policies.
Despite efforts and advocacy in favour of transitioning to cleaner cooking fuels, traditional, highly polluting fuels remain dominant in many developing countries. This has prompted the need for further research and evidence to support policies to increase clean energy adoption and accelerate the energy transition agenda in these countries. This study investigates the role of social origin, proxied by parental education, in the choice of cooking fuel in Ghana. Parental education is treated exogenously; hence, linear probability estimation is employed to examine the relationship between parental education and energy choice. The study finds that parental education significantly positively affects clean cooking fuel adoption, with more potent effects found in fathers’ education than in mothers’ education. Heterogeneity analyses show the impact of dampening among lower-income groups and rural residents. With a noticeable shift in educational attainment trends in recent times, as more persons attain higher education, the findings suggest that policies that infuse the socialisation of children with clean energy and sustainability issues will accelerate the clean energy transition.
In this paper, we explore the development of two specific carbon capture technologies, namely Carbon Capture, Transport, and Storage (CCTS) and Direct Air Capture (DAC), with respect to the role attributed to them by long-term climate scenarios. We ask whether the critical assessment of earlier literature on the gap between ambitious targets in top-down energy and climate models and the modest level of real-world implementation has abided. We provide a survey of the full set of projects on CCTS in the energy and industry sectors, as well as of all DAC projects worldwide. For CCTS, we find that although several demonstration projects have been implemented over the past 15 years, the scale of deployment remains low. In the power sector, only a few large-scale projects remain operational as of 2025; others have been delayed or cancelled. Industrial CCTS shows broader engagement, yet most projects remain below the 1 MtCO₂/year threshold. The deployment of DAC, too, has remained at very low levels: While integrated assessment models (e.g., EMF-38 and AR6 scenarios) project deployment of several gigatons per year by 2050, the actual installed DAC capacity in June 2025 remains below 0.05 MtCO₂/year. The paper concludes that while carbon capture remains a compelling field for innovation, the gap between scenario optimism and real-world progress has not closed. This is not the "fault" of the models, but it suggests that optimal technology deployment strategies might be more complex to implement than these models suggest. Note: This is an accepted manuscript of an article forthcoming in Economics of Energy & Environmental Policy. The final version will be available via the journal.
The transformation of the European electricity system from centralized fossil-based generation to a decentralized renewable-based system poses challenges for the current market design with uniform national price zones. This design lacks spatially differentiated investment signals and market incentives for grid-supportive flexibility behavior. This study examines various market design options—such as bidding zone reconfigurations, capacity payments, and dynamic tariffs—and analyzes their combined effects on investment decisions, dispatch and ex-post congestion management. A multi-level electricity market model is applied to the German power system for the year 2030, incorporating market-driven investments and system operation. Results indicate that a uniform price zone leads to suboptimal investment signals and inefficient deployment of flexibility options. Capacity payments can ensure overall installed capacity levels but fail to provide regional incentives. In contrast, zonal pricing reflects structural congestion and aligns investment incentives with grid information, substantially improving flexibility deployment and reducing congestion. Overall, regional price differentiation emerges as the key driver of efficient investment and system operation, while capacity payments and dynamic tariffs only unfold additional value when combined with such locational signals.
This study investigates factors responsible for the poor performance of 67 electric utilities in 47 countries in Sub-Saharan Africa (SSA) region using descriptive data available from the World Bank, International Energy Agency, United States Energy Information Administration and national sources. Both cost-and revenue-side factors are found responsible for the poor financial performance of electric utilities in the region. More than two-thirds of vertically integrated utilities (VIUs) and electricity distributional utilities (EDUs) are unable to cover their operational and debt service costs by their revenues. Higher fuel costs (particularly oil), lower capacity factors, lower capital and labor productivity, high transmission and distribution (T & D) losses and leakage in electricity bill collections are found mainly responsible for the poor financial performance. On the other hand, consumers face higher electricity tariffs than in many countries around the world despite their much lower per capita income. The study also investigates how much the reduction of the T&D losses and elimination of the leakages in bill collection improve the financial performance of utilities and finds that out of 25 utilities currently operating in loss, 11 will have higher revenue than their operating costs due to T&D loss reduction and elimination of bill collection leakage. The findings indicate that policymakers in the SSA region should focus on a portfolio of policies, including switching away from expensive generation to emerging cheaper options, improving factor productivities, efficient institutions/governance, reduction of T&D losses, improvement of bill collection and tariff reforms. Policy priority, however, could vary across countries depending on the roles of various factors contributing to the poor financial performance.
Alternative fuels have become increasingly important in the U.S. fuel market in the last few decades. While most previous literature has focused on oil, gasoline, and biofuel prices, the studies on the topic of multiple alternative fuel prices across regions were limited. Using the fuel price data from seven U.S. districts, our study investigates the horizontal price transmission between gasoline and alternative fuels, as well as the vertical price transmission between marginal costs and alternative fuels. Our analysis reveals a deeply integrated U.S. fuel market. Specifically, a 1% rise in gasoline prices corresponds to a 0.811% increase in ethanol prices and a 1.053% increase in biodiesel prices. This positive connection is further confirmed when analyzing price returns, indicating that alternative fuel prices move in tandem with their substitutes. Additionally, the examination of vertical price transmission reveals that higher marginal cost of propane is associated with rising propane prices.
The Asia-Pacific region is the world’s largest energy consumer, yet energy diversification across countries remains significantly uneven despite rising demand and renewable progress. This study examines whether energy diversification is converging in the region and how financial development and economic wealth influence this process. Using data from 40 countries between 1997 and 2021, we found that countries with initially low diversification have improved faster, and regional disparities have narrowed. However, the distribution of diversification levels reveals two distinct peaks, suggesting the presence of convergence clubs. The log-t test confirms this by rejecting full convergence and identifying two clubs: Club 1 (14 countries) with low and slightly declining diversification, and Club 2 (22 countries) with high and increasing diversification. Regional-level regression results show financial development as the strongest driver of energy diversification, followed by per capita income. At the club level, financial development consistently supports diversification, but income has mixed effects negatively associated with diversification in Club 1 and weakly positive in Club 2. These findings underscore the need for club-specific strategies, with policymakers tailoring interventions to their country’s club membership, energy diversification level, and development stage.
The European Union (EU) has targeted the adoption of environmentally-friendly public transportation (EFPT) system as a strategic initiative to improve local ambient air quality, reduce road congestion, and contribute to the reduction of greenhouse gas (GHG) emissions. In support of these policy goals, this study assesses and compares public support for EFPT across 31 European nations. We use a Bayesian logit model with identified scale to estimate the willingness to pay (WTP) for local EFPT upgrades, utilizing data from 6,520 contingent valuation survey responses. Our findings indicate that WTP is primarily driven by expected improvements in public goods, such as air quality and GHG abatement, rather than private ridership benefits. On average, individuals across all nations demonstrate a WTP of 7.48 euros per month. The consistently positive WTP distributions across all nations suggest implicit public support for EFPT at the EU-level.
This study evaluates energy efficiency in India's energy-intensive industries using Total-Factor Energy Efficiency (TFEE), contrasting it with the traditional Single-Factor Energy Efficiency (SFEE) approach.Analyzing panel data from 2003-04 to 2021-22 from the Prowess database, we applied Data EnvelopmentAnalysis (DEA), including the input-oriented Slack-based method with variable returns to scale, to assess attainable energy savings. While SFEE studies under the Perform Achieve and Trade (PAT) scheme show limited overall impact, with notable improvements in the cement and fertilizer sectors but not in pulp & paper, our TFEE analysis indicates significant efficiency gains in iron & steel and textile sectors but not in cement, pulp & paper, aluminium, or fertilizer. Despite a potential of 55.9% energy savings across industries, overall energy efficiency improved significantly during the period studied. The textile, iron & steel, and pulp & paper sectors show the greatest potential for improvements, at 65%, 61%, and 29%, respectively.
The transition to new energy sources is critical for addressing global carbon emissions. However, there is limited study on how decentralized energy governance (DEG) strategies can effectively promote this transition and mitigate carbon emissions. This study investigates the impact and mechanism of China's New Energy emissions. Using city-level data from 283 Chinese cities spanning 2006 to 2021, we employ the difference-in-differences method to analyze the policy's effects. The results suggest that the DEG strategy significantly reduces carbon emissions, primarily through renewable energy innovation and energy transitions. Heterogeneity analysis further highlights that the policy's effectiveness is more pronounced in non-resource-based cities, R&D- intensive cities, and those with strong environmental regulations. These findings underline the importance of expanding DEG strategies and investing in resources to foster innovation and accelerate energy transitions, providing valuable policy recommendations for achieving carbon neutrality.
Access to low- cost finance is a significant factor influencing firms' investment decisions in research and development, which is crucial for corporate success. The goal becomes critical when the firm's sustainability policy channels energy consumption, resulting in optimal capital allocation for new, resource- efficient technologies. Despite its significant relevance in policymaking, there has been little academic study on the potential influence of energy efficiency on enterprises' cost of debt, particularly in emerging countries such as India. To gain a deeper understanding, this study examines the impact of a firm's energy efficiency, a strategic step in sustainable operational practices, on the cost of debt for high- and medium- tech firms in India. For this purpose, we conducted a panel data analysis using 7,603 observations classified as high and medium tech from 2010 to 2022, employing two- stage least squares Tobit regression models. The findings show that firms with policies on energy efficiency measures could benefit from lower borrowing costs in their financing decisions. The findings reveal a curvilinear relationship between firms' energy efficiency and the cost of debt in both the high- tech and medium- tech sectors, suggesting that efficient energy consumption can yield financial advantages beyond a certain point, after which a diminishing effect may occur. However, the findings do not hold when firms are less energy efficient and ownership changes to foreign control. The insights of the study may guide firms in developing countries in formulating their energy policy toward environmental sustainability, designing an effective ownership structure, and allocating resources while reducing financing expenses, thus aligning corporate interests with economic objectives. Financial institutions can also leverage these outcomes when formulating a lending policy that considers firms'energy efficiency.
The energy transition is expected to leave fossil fuel producers with weakened economies and stranded assets, but the time horizon of these effects is uncertain. This article offers a window into these effects by studying the sovereign credit ratings of petrostates. Credit ratings are both forward-looking indicators of their economic outlook and determinants of petrostates' ability to raise capital, and may thus already reflect concerns about the energy transition's anticipated effects. Using data on sovereign credit rating decisions, this article studies changes in petrostate ratings over time. We find some signs that they are declining, but also that this is not primarily the result of systematic downgrades. For the time being, credit rating agencies are instead rewarding petrostates less for high oil prices and punishing them more for low levels of economic diversification. The short-to-medium term risk horizon of rating agencies means thatfuture downgrades could come suddenly and steeply.
We compare the effectiveness of social comparison nudges on energy consumption when residents pay for electricity and when electricity is included in monthly rent. Using a randomized control trial, our intervention uses digital messages (text and emails) to provide residents with home energy reports comparing their recent electricity usage with similar households. Our design allows us to investigate the pecuniary and non-pecuniary impacts of a widely-used behavioral nudge. The average treatment effects suggest that peer comparison nudges are less effective for non-ratepaying customers, implying that cost-saving motives play an important role.
There is growing recognition of the relative importance of anthropogenic emissions of methane as a contributor to global climate change.An important source of such emissions in some countries, including the United States, is the oil and gas (O&G) sector. This points to the importance of developing understanding of the marginal abatement cost functions for methane emissions reductions. Scholars have employed a diverse set of methodologies to estimate abatement costs, including engineering cost models, econometric analysis of natural gas markets, and statistical retrospective analysis of state-level regulation. We critically examine these approaches and synthesize their results. We find significant potential for low-cost methane abatement in the O&G sector in the United States and elsewhere, although claims of widespread negative abatement cost opportunities should be taken with a grain of salt. We also find that the potential for low-cost abatement is not without limit. Whereas it appears that cutting methane emissions in half would be relatively inexpensive, a sharp uptick in marginal abatement cost may occur when reductions exceed 60 to 80 percent below baseline levels. This threshold may change over time with technological advances in remote sensing, which can reduce abatement costs at various levels of ambition.
