Switching to coal or renewable energy? The effects of financial capital on energy transitions
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PhD Seminar (Econ)
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Does a country’s stock of financial capital affect its ability to achieve energy transitions? This paper uses data for up to 137 countries for the period 1998–2013 to investigate the importance of financial capital for changes in the use of each energy type. For high-income countries, I find that financial capital facilitates transitions from fossil fuels to modern renewable energy sources, especially wind. A one standard deviation change in private credit leads to a 0.5 standard deviation change in wind energy consumption. For lower-income countries, financial capital supports progression towards fossil fuel energy sources such as coal. Income and natural resource endowments also affect energy transitions.
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