Does renewable energy consumption improve carbon efficiency? Evidence from 116 countries

Abstract

A more comprehensive understanding of the impact of renewable energy on carbon efficiency could serve to achieve the win-win goal of carbon reduction and economic growth. This paper develops a data envelopment analysis model to measure carbon efficiency, analyses the non-linear, mediating and heterogeneous effects of renewable energy on carbon efficiency using panel data for 116 countries over the period 2005 to 2020. The results show that: (i) there is a certain difference in carbon efficiency among countries in different income groups. Specifically, the carbon efficiency of low-income and low-middle-income countries is generally in a low-efficiency state. (ii) There is an intermediary effect between renewable energy and carbon efficiency, which means that carbon efficiency can be indirectly improved by promoting technological innovation. (3) With the increase of income level, the positive effect of renewable energy on carbon efficiency is more effective. Finally, targeted policy recommendations are proposed.