Climate change adaptability and the energy transition

While existing research emphasizes economic conditions, institutions and environmental policies as determinants of renewable energy deployment, the role of climate adaptability and its underlying dimensions remains less understood. This study addresses this gap by examining the relationship between climate adaptability and renewable energy deployment using panel data for 63 developed and developing countries from 1995 to 2021. Adaptability is measured using the Notre Dame Global Adaptation Index, which combines climate vulnerability and adaptation readiness. Using a two-stage instrumental variable estimator that accounts for endogeneity and unobserved common factors, we find that greater adaptability is positively associated with renewables’ share of primary energy consumption. Disaggregated estimates show positive associations with economic, governance and social readiness, alongside a negative association with climate sensitivity. Additional analysis identifies positive relationships with wind deployment and renewable capacity expansion. By distinguishing the dimensions underlying the aggregate adaptability relationship, the study provides a complementary perspective on the institutional, investment and social conditions associated with renewable deployment and the climate-related constraints that may impede it.