Managing the Renewable Energy Generation Aligned With the Sustainable Development Goals: How Institutions, Finance and Public Debt in EU Countries Affect the Renewable Energy Transition?

This study analyzes the long-run effects of institutional quality, public debt, financial development, and economic freedom on renewable energy generation using annual panel data from 17 European Union (EU) member states between 2000 and 2023. Second-generation econometric methods were applied, considering interdependence and slope heterogeneity between countries. The long-run relationship between variables was analyzed using the Westerlund panel cointegration test (2007); long-run coefficients were obtained using the Augmented Mean Group (AMG) estimator, and the robustness of the results was tested using the Common Correlated Effects Mean Group (CCEMG) estimator. The findings show that increasing financial development and institutional quality have a significant and positive impact on sustainable energy generation. Public debt has a less positive impact on energy generation compared to other variables (financial development and institutional quality). This suggests that public debt can help facilitate targeted green energy investments. On the other hand, economic freedom does not appear to have an independent effect. This also shows that good governance and a robust financial system are needed to fully benefit from regulatory clarity. The findings offer useful policy recommendations for promoting sustainable energy and are aligned with Sustainable Development Goals 7, 9, and 13.