Beyond the grid: policies and economic factors behind renewable energy consumption

The global community is facing increasing risks associated with climate change and a continuously growing demand for energy. This development has made apparent the necessity of transitioning from high-emission fossil fuels to cleaner, more sustainable energy sources and renewable energy is a key pillar of this transition. This paper studies the influence of various environmental, economic, fiscal and monetary policy factors on the expansion of renewable energy consumption. The analysis uses a global sample of 40 countries over the period 1990–2020 to study how these policy dimensions and economic factors shape the share of renewable energy within national energy mixes. The findings indicate that environmental policies, particularly market-based instruments and technology support measures, have a positive and significant impact on the change of renewable energy consumption (REC). Fiscal policy variables have more consistent statistically significant relationships with REC than the monetary policy variables examined. The split-sample analysis indicates that the Environmental Policy Stringency indicator is statistically significant only among EU member states. Additionally, private investment has a delayed significant effect for this subgroup, which implies potential differences in policy effectiveness and institutional frameworks between EU and Non-EU countries.