Renewable-energy consumption and international trade

This paper investigates the implications for international trade of a country's dependence on renewable energy consumption in total energy use. We use data for 152 countries over the period 1990-2014. We estimate a gravity equation of bilateral trade to assess the role of renewable energy consumption on international trade. We find, inter alia, that a 1% increase in the use of renewable energy as a proportion of total energy leads to, on an average, a 1.026% decrease in exports, and a 0.39% increase in imports, suggesting that renewable energy use makes trade less competitive. This outcome is due in part to cost implications of using renewable energy sources. However, we also find some heterogeneity in this respect. Whereas Organization for Economic Co-operation and Development (OECD) countries export more with increased use of renewable energy, for non-OECD countries renewable energy use reduces exports. (c) 2022 The Author(s). Published by Elsevier Ltd.

Automated summary

This paper investigates the implications of a country's dependence on renewable energy consumption in total energy use for international trade. The findings suggest that renewable energy use reduces the competitiveness of trade, leading to a decrease in exports and an increase in imports. However, there is heterogeneity in these effects between OECD and non-OECD countries.