Managing the SDG-Aligned Energy Transition in OECD Countries: How Do Economic Growth, Income Inequality, and Environmental Protection Expenditures Impact Energy Transition?

In recent years, transition to renewable energy has emerged as a vital strategy for achieving sustainable development and reducing environmental degradation. Only when backed by a solid institutional and macroeconomic context can economic growth serve as a stimulus for the development of renewable energy. In the same way, reducing income inequality increases the affordability, accessibility, and societal support needed for a just energy transition. Environmental protection expenditures play a complementary role by stimulating innovation, reducing regulatory uncertainty, and enhancing institutional capacity for long-run sustainability. Furthermore, indicating environmental stress, a decreasing load capacity factor emphasizes how urgent it is to accelerate the use of renewable energy. This study looks at how transition to renewable energy in OECD economies is affected by economic growth, income inequality, environmental protection expenditures, and load capacity factor between 2000 and 2021 using the common correlated effects mean group (CCEMG) estimator and its regularized extension (rCCE). The results indicate that while economic growth has a detrimental impact on green energy transition in Italy, Estonia, and Ireland, it has a favorable impact in Belgium. Income inequality has a detrimental impact on Belgium's and the Netherlands' green energy transition. The Czech Republic's green energy transition is positively impacted by environmental protection expenditures; however, Germany and Ireland are negatively impacted. In Spain and the United Kingdom, load capacity factor has a favorable impact on green energy transition. On the other hand, this element has a detrimental impact on Italy's shift to green energy. The study includes country-based policy recommendations within the findings.