The Influence of Environmental Policies and Technologies on the Transition to Renewable Energy.

Abstract

Renewable energy capacity (REC) plays a central role in achieving sustainable development and carbon neutrality, yet the effects of ecological policy performance, environmental quality, technological innovation, and green economic growth on REC remain heterogeneous across countries and stages of renewable energy development. This study investigates the determinants of renewable energy capacity across 21 OECD countries from 2000 to 2020, focusing on ecological policy performance (EPI), greenhouse gas (GHG) emissions, eco-friendly technology (EFT), and Green GDP. The empirical framework employs the Panel Autoregressive Distributed Lag (ARDL) bounds testing approach to examine long-run cointegration, the Method of Moments Quantile Regression (MMQR) to capture heterogeneous effects across the conditional distribution of REC, and panel Granger causality tests to determine the direction of causal relationships. The Panel ARDL bounds test confirms a stable long-run equilibrium relationship among the variables (F = 7.845, p < 0.01). MMQR results show that EPI exerts a positive and progressively stronger effect across quantiles (0.092-0.212), while EFT exhibits the steepest positive gradient (0.131-0.221) and demonstrates bidirectional causality with REC, indicating a reinforcing cycle between technological innovation and renewable energy deployment. GHG emissions have a modest positive association with REC (0.048-0.082) but do not unidirectionally cause REC; instead, higher renewable energy capacity significantly reduces emissions. Green GDP consistently exhibits a negative effect on REC (-0.348 to -0.138), although this effect weakens at higher renewable energy capacity quantiles, suggesting a transitional adjustment during the shift toward a greener economy. These findings indicate that the effects of environmental policy, technological innovation, emissions, and green economic performance are stage-dependent, highlighting the need for deployment-specific policy frameworks, sustained investment in green research and development, and complementary policy instruments to mitigate short-term adjustment costs while accelerating the renewable energy transition.