Natalie Brown Kshithij Shrinath Kenyon Smutherman

$ kWh $ kWh $ kWh

How does a country’s level of economic development affect its renewable energy production?

Linear Inverse U-shaped Developing countries produce more U-shaped Developing countries produce less

Low/middle-income - vulnerability to climate change High-income - energy stability Oil price increases and volatility Supply-side factors

Benefits difficult to quantify High fixed and initial capital costs Urbanizing countries tend toward fossil fuels Financing mechanisms unavailable in low-income and middle-income countries High-income countries entrenched in fossil fuels US $41 billion in subsidies to oil and gas

From the World Development Indicators Independent variable: log GDP per capita (PPP) in constant 2005 US$ Dependent variable: electricity produced from renewable sources (kWh) per capita (includes nuclear) 1990 to observations from 131 countries

Simple regression Country and year fixed-effects Geography – land area, forest area, agricultural land Population – density, rural percentage Trade – imports/exports Political indicators - European Union, OECD, regime type

Note the coefficients

Linear and U-shaped hypotheses significant at 1% level throughout all models Linear more correct from descriptive data U-shape only in underdeveloped category Developed countries significantly outpace others Developing similar level to underdeveloped

Renewable energy is a normal good Fairly intuitive Underdeveloped and developing countries in trouble 33% of greenhouse gas usage, 75% of damage Adaptation more practical than mitigation Internalize the social costs of fossil fuels and social benefits of renewable energy Correct the externality

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