How does renewable energy encourage carbon unlocking? A global case for decarbonization

Fossil energy has contributed to economic growth while creating serious carbon lock-in (CLI), but the development of renewable energy may be able to break this paradox. Therefore, this study uses the instrumental variable-generalized method of moments (IV-GMM) approach to assess the impact of renewable energy consumption (REC) on CLI, based on the data of 77 countries during the period 2000-2020. We also explore the CLI mitigation effect brought by different kinds of REC and generation. Moreover, the asymmetric effect and the direct and indirect impact mechanisms are also investigated. We thus have made the following findings: (1) REC significantly contributes to CLI reduction around the world, a proposal that remains robust under a series of robustness tests; (2) geothermal energy consumption and generation have the most remarkable effects on CLI inhibition; (3) REC shows a higher marginal effect on low quantiles of CLI (e.g., the 10th quantile) than high quantiles of CLI (e.g., the 90th quantile); and (4) REC can not only directly lead to CLI reduction, but it can also indirectly reduce CLI through technology effect and scale effect. These findings have important implications for promoting the energy transition and mitigating climate change. Based on these findings, we put forward some policy implications for the governments to cope with the CLI issue.

Automated summary

This study uses the IV-GMM approach to assess the impact of renewable energy consumption on carbon lock-in. The findings suggest that renewable energy significantly reduces carbon lock-in, with geothermal energy having the most remarkable effect. Additionally, renewable energy has a greater impact on low carbon lock-in quantiles and can indirectly reduce carbon lock-in through technology and scale effects.