Energy mix diversification in emerging economies: An econometric analysis of determinants

Energy mix diversification (EMD) is recognized as a plausible strategy for emerging economies to achieve energy security targets and meet net zero carbon emissions goals by 2050. Thus, this research explores the determinants of EMD utilizing a sample panel for seven major emerging (E7) economies, including Brazil, China, India, Indonesia, Mexico, Russia, and Turkey, observed from 1995 to 2018. The Pedroni panel cointegration test investigates the long-run equilibrium, and the long- and short-run determinants are identified using a panel autoregressive distributed lag model. The findings reveal a long-run equilibrium linkage among EMD, carbon emissions, financial development, economic growth, technological progress, energy efficiency, and globalization. The long-run estimates show that energy efficiency and carbon emissions are driving forces for EMD, whereas technological progress, financial development, and globalization have insignificant effects. However, all variables - except economic growth are found to be the barriers to EMD in the short-run. The findings presented in this research are novel and add value to the energy literature by identifying the long- and short-run determinants of EMD, specifically for E7 economies. These economies are expected to take appropriate actions to stimulate the adoption of clean and green energy sources; thus, appropriate implications of the findings are discussed.

Automated summary

This research explores the determinants of energy mix diversification (EMD) and finds that energy efficiency and carbon emissions are the main driving forces for EMD, while technological progress, financial development, and globalization have insignificant effects. Furthermore, all variables - except economic growth - are found to be barriers to EMD.