Work

Threshold Effects of Renewable Energy Investment on the Energy Efficiency–Fossil Fuel Consumption Nexus: Evidence from 71 Countries

Year: 2025

Type: article

Abstract: As global focus on energy transition and carbon reduction grows, energy efficiency and renewable energy investment have become key policy tools. This study explores the nonlinear relationship between energy efficiency and fossil fuel consumption, emphasizing the threshold effect of renewable energy investment. Using panel data from 71 countries and a dynamic panel threshold model, the analysis reveals that at low renewable energy investment levels, energy efficiency improvements may be limited by the rebound effect, failing to significantly reduce fossil fuel consumption. However, once investment surpasses a critical threshold, energy efficiency begins to play a stronger role in reducing fossil fuel use. A heterogeneity analysis further shows that developed countries and those with carbon trading systems are more effective in leveraging energy efficiency for emission reduction. The findings highlight the need for synergistic policies combining renewable energy investment, carbon markets, and environmental regulations to accelerate the energy transition and achieve carbon neutrality.

Source: Energies

DOI: 10.3390/en18082078

Authors: Qing Chang, Xiangbo Fan, Shaohui Zou

Institution: Xi'an University of Science and Technology

Language: English

Topic: Energy, Environment, Economic Growth

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Climate action, Affordable and clean energy, Industry, innovation and infrastructure

Open Access status: gold

Estimated APC paid: $3,137