Journal of Econometric Modelling

Journal of Econometric Modelling

Determinants of Renewable Energy Consumption in OPEC Member Countries

Document Type : Original Article

Authors
Paria Kavianyniya 1
Vida Varahrami 2
Hasan Dargahi 2
1 Master in Economics, Department of Economics, Shahid Beheshti University
2 Associate Professor in Economics, Department of Economics, Shahid Beheshti University
10.22075/jem.2025.38691.2031
Abstract
This study aims to identify and analyze the determinants of renewable energy consumption in OPEC member countries during the period 2002–2024. For this purpose, a random-effects panel data econometric model was employed. The independent variables include real oil price, innovation, trade openness, foreign direct investment, and the interaction effect of carbon dioxide emissions and GDP.  The model results indicate that innovation and trade openness have a positive and significant effect on renewable energy consumption. This finding highlights the crucial role of technological advancements and global interactions in the development of clean energy. Conversely, an increase in real oil prices and income coupled with higher carbon emissions had a negative and significant impact on renewable energy consumption. These findings suggest that high oil revenues and an economic development pattern based on fossil fuels reduce the incentive for a transition to clean energy in these countries. The effect of foreign direct investment on renewable energy consumption was not statistically significant during this period, which may indicate that this capital is not sufficiently directed toward the green energy sector. The findings recommend that OPEC policymakers should focus on fostering innovation, increasing trade interactions, and reducing their dependency on oil revenues to achieve sustainable development.
Keywords
Renewable Energy Consumption
OPEC
Innovation
Trade Openness
Foreign Direct Investment
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