Corrupting Renewable Energy: A Cross-National Analysis of CO2 Emissions

Abstract

Many nations are investing heavily in renewable energy sources to support their development. However, there is debate among researchers concerning whether renewable energy leads to reductions in CO2 emissions. Renewable energy sources should reduce CO2 emissions, yet some researchers have observed a “displacement paradox,” in which renewables are used alongside fossil fuel energy instead of displacing it, and therefore CO2 emissions are not substantially reduced. We argue that corruption may be partially responsible for the displacement paradox. We use two-way fixed effects regression from 1990 to 2015 to test how executive and public sector corruption moderates the effect of renewable energy consumption on CO2 emissions per capita for 160 nations. We find support for our hypothesis, as the interaction terms reveal that corruption slows the beneficial effect of renewable energy consumption on CO2 emissions. When nations control corruption within their borders, the positive impact of renewable energy is more than doubled.