Influence of economic and political factors on low-carbon electricity production in the context of EU energy policy

Abstract

Various studies suggest that economic and political factors may influence energy transition across countries. This paper investigates relationships between those factors and low-carbon electricity production, which implicitly represents an energy policy of a government. A certain innovation in this study is the use of an additional model incorporating natural gas among other low-carbon energy sources. Despite the present literature is not covering it, this is in line with the current policy practice, and therefore it is worth to be examined. An analysis of the recent studies imply that factors like national wealth, economic inequality and the state of democracy in particular countries may affect the energy policy. This paper focuses on exploring these potential relationships across the member states of the European Union and then discussing it within the specific context of EU regulatory framework related to the energy policy. The research question this paper is aiming to answer is as follows: Do national wealth, income inequality and state of democracy have an influence on the share of lowcarbon energy sources in electricity production across EU countries faced with EU climate policy? The study uses panel data regression analysis as a main component of the methodology. Conclusions derived from the research suggest that from the factors discussed, only national wealth is the one that affect the energy transition process in the EU countries. This finding may be useful in the process of designing the energy policies. Better understanding of the matter regarding the differences between the EU countries in the energy transition can help to mitigate uneven peace of this process.