Digital Capability and the Developmental Returns to Renewable Energy: Cross-Country Panel Evidence on SDG Performance

This study asks when renewable energy translates into sustainable-development progress. The central contribution is to show that the aggregate renewable-energy share is a compositionally ambiguous indicator whose developmental meaning depends on a country’s stage of energy modernisation. In an unbalanced panel of 154 countries (2000–2022) linking the Sustainable Development Report SDG Index to World Bank indicators, two-way fixed-effects estimates with Driscoll–Kraay standard errors show the renewable share to be negatively associated with SDG performance on average. Three results demonstrate that this reflects traditional biomass rather than modern renewable energy: the renewable share correlates −0.81 with clean-cooking access; the renewable association turns from negative in biomass-dependent economies to positive in modern-energy economies; and a modern-renewable-electricity measure carries no negative coefficient, with the penalty concentrated in the social goals, where household air pollution and fuel-collection burdens fall. Digitalisation is positively associated with SDG performance and similarly conditions the renewable association, but it is best read as a correlated marker of modernisation rather than an independent causal lever. All estimates are conditional associations rather than causal effects. The findings imply that renewable-energy investment yields larger developmental returns when sequenced with clean-cooking and digital-infrastructure programmes, particularly in non-high-income countries.