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Energy transition determinants in the European Union: threshold effects

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Abstract

The World Economic Forum (2018) has introduced a comprehensive proxy for the Energy Transition Index (ETI), which includes two main sub-indices; the energy System Performance Index (SPI) and Transition Readiness (TRI). The first sub-index measures the current state of the energy system, and the latter indicates future transition(s). Any factor that can move these two levers in a positive direction will eventually lead to improved energy transitions. Various factors affect the energy transition. Since the ETI is a comprehensive index that includes socio-economic, governance structures, and political dimensions of the energy transition, it is expected to be impacted by globalization and economic complexity. The present study seeks to answer whether the impact of globalization and economic complexity on both energy transition sub-indicators is in the same direction. Also, do the effects of these two variables vary at different levels of energy transition and its sub-indices? For this purpose, we implement a fixed-effect panel threshold model for data from the European Union. The results demonstrate that (overall) globalization significantly influences the ETI and its sub-indices at all levels. The economic complexity in all three regimes reduces TRI (at 90% or 95% confidence intervals). Nevertheless, it harms the SPI and ETI if they exceed the threshold.

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Fig. 1

Source: United Nations, Energy Statistics

Fig. 2

Source: United Nations, Energy Statistics

Fig. 3

Source: International Energy Agency (IEA)

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Fig. 5
Fig. 6

Source: Research findingFootnote

How to calculate these indicators is explained in “Data.”.

Fig. 7
Fig. 8

Source: research finding

Fig. 9

Source: research finding

Fig. 10

Source: research finding

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Data availability

The datasets used and/or analyzed during the current study are available from the corresponding author on reasonable request.

Notes

  1. The economic, social, and political dimensions are different dimensions of globalization. Economic globalization usually is measured by trade openness (Samadi 2019). Social globalization is measured as the spread of peoples, images, information, and ideas. Political globalization is thus measured as the diffusion of government policies (Asongu and Biekpe 2018). The KOF Globalization Index is a composite index measuring globalization along the economic, social, and political dimensions.

  2. https://atlas.cid.harvard.edu/rankings

  3. The vertical axis unit is the petajoules.

  4. How to calculate these indicators is explained in “Data.”.

  5. The fixed-effect panel threshold method is used in this research, although, in this methodology, there are appropriate tests for pre-estimation and it is possible to make sure whether the model is linear or not, and the number of thresholds is determined, but the limitation and weakness of this methodology are in the post-estimation tests, which do not report goodness-of-fit statistics.

  6. https://dataverse.harvard.edu/dataverse/atlas

  7. Besides that, the World Economic Forum index has not been calculated for some countries, including Cyprus, the Czech Republic, Estonia, and Latvia.

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Authors and Affiliations

  1. Department of Economics, Shiraz University, Shiraz, Iran

    Sakine Owjimehr & Ali Hussein Samadi

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  1. Sakine Owjimehr
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  2. Ali Hussein Samadi
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Contributions

Conceptualization by Ali Hussein Samadi; methodology by Sakine Owjimehr; formal analysis by all authors; resources by Sakine Owjimehr; writing—original draft preparation by Sakine Owjimehr; writing—review and editing by Ali Hussein Samadi. All authors have read and agreed to the published version of the manuscript.

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Correspondence to Sakine Owjimehr.

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Highlights

• Globalization has a significant positive impact on the energy transition and its two sub-indicators in the EU.

• By improving energy transition and its two sub-indicators, the impact of globalization would increase in the EU.

• The economic complexity reduces transition readiness at all levels in the EU.

• The economic complexity in the early system performance levels helps improve it in the EU.

• Economic complexity gets impaired at high energy transition levels and system performance levels in the EU.

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Owjimehr, S., Samadi, A.H. Energy transition determinants in the European Union: threshold effects. Environ Sci Pollut Res 30, 22159–22175 (2023). https://doi.org/10.1007/s11356-022-23743-w

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