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Understanding how climate preferences, environmental policy stringency, and energy policy uncertainty shape renewable energy investments in Germany

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Abstract

Germany, as one of the largest carbon emitters in the world, faces a crucial challenge in meeting SDG 7, which underscores the importance of affordable and clean energy. To achieve sustainability and combat climate change, it is imperative for Germany to devise innovative policies aimed at enhancing the accessibility and cleanliness of energy sources. Therefore, this study examines how climate preference, environmental policy stringency, and energy policy uncertainty affect renewable energy investments. We used a unique bootstrap rolling window causality technique to examine sectoral quarterly data from 2004 to 2021. The results from the parameter instability tests indicate that none of the estimated models exhibit constant parameters. The bootstrap rolling window causality analysis reveals that climate preference and environmental policy stringency significantly and positively impact biomass and solar energy investments, while having no influence on wind energy investments. Meanwhile, energy policy uncertainty negatively affects biomass and solar energy investments, with no impact on wind energy investments. The study provides policymakers with practical insights to help them make insightful decisions and accomplish strategic actions to encourage renewable energy investments and a sustainable future.

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Notes

  1. https://dashboards.sdgindex.org/profiles/germany.

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Authors and Affiliations

  1. Sunway Business School, Sunway University, Bandar Sunway, Malaysia

    Muhammad Saeed Meo

  2. University of Economics and Human Sciences, Warsaw, Poland

    Muhammad Saeed Meo

  3. Advanced Research Centre, European University of Lefke, Lefke, TR-Mersin, Northern Cyprus, Turkey

    Muhammad Saeed Meo

  4. Accounting Research Institute (HiCOE), University Teknologi MARA (UiTM), Shah Alam, Selangor, Malaysia

    Naila Erum

  5. LEPPESE Laboratory, University Centre of Maghnia, Maghnia, Algeria

    Hicham Ayad

Authors
  1. Muhammad Saeed Meo
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  2. Naila Erum
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  3. Hicham Ayad
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Contributions

MSM has performed empirical analysis and wrote conclusion and policy implications. NE worked on methodology and interpretation of results. HA worked on introduction and literature review.

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Correspondence to Naila Erum.

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Meo, M.S., Erum, N. & Ayad, H. Understanding how climate preferences, environmental policy stringency, and energy policy uncertainty shape renewable energy investments in Germany. Clean Techn Environ Policy (2024). https://doi.org/10.1007/s10098-024-02876-1

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