Dynamic effects of energy aid in energy transition under the moderating role of the government's regulatory quality

Abstract

Energy aid to Asia Pacific countries seems attractive for decarbonization and renewable energy transition. However, no clear picture has been drawn on the synergetic connections between the energy aid and the transition to renewable energy in the Sustainable Development Goal 7 (SDG7) paradigm. Therefore, this study is designed to fill this gap by examining the energy aid and its response to energy transition, measuring it with four sub-indicators of SDG7. Using a robust econometric framework, the empirical findings indicated that total energy aid has substantial potential in transitioning to renewable energy, and the link is more pronounced with energy policy aid and renewable energy aid in the Asia Pacific. The response of energy aid through the moderating effect of government regulatory quality on energy transition is also strong. These results carried similar signs and magnitude across the regional panels, estimates with multiple estimators, including asymmetric analysis, making the results robust for theoretical foundations. The novel findings from this study have scope for policymakers to design a practical policy roadmap for the transition of renewable energy to reach a carbon-neutral globe.