The impact of globalisation and education in promoting policies for renewables and energy efficiency

Policies targeting energy efficiency and renewable energy are sometimes viewed as more politically feasible than carbon pricing in pursuit of emission reduction goals. This paper assesses underlying drivers of energy policy development. These factors include economic, social, environmental, and institutional variables. The between estimator for panel data is an appropriate method for our focus on some exogenous variables that vary more across countries than over time. We find that larger oil reserves per capita have a negative relationship with renewable energy policy development. Education and political globalisation have strong positive relationships with both energy-efficiency and renewable-energy policy development. These results suggest that greater participation in global political groups can be an indirect approach toward energy policy development, in cases where direct and immediate policies are hard to implement. OECD countries have higher policy scores by 33 and 25 points in energy efficiency and renewable energy respectively. Blinder-Oaxaca decomposition analysis shows that these higher scores are primarily due to social and political institution predictors rather than economics and physical endowments.