Environmental Taxes, Economic Growth, and Financial Development as Determinants of Renewable Energy Consumption in OECD Countries

ABSTRACT: This study analyzes the simultaneous impact of environmental taxation, economic growth, and financial development on renewable energy consumption in OECD countries in the period 2003–2021. The data is built from sources from the OECD, World Bank and KOF, with a tabular data model that controls for country and time effects to better reflect differences between countries as well as fluctuations over time. The empirical results show that environmental taxation and financial development have a positive impact, while economic growth does not show clear statistical significance in the linear model. In addition, carbon emissions are inversely correlated with renewable energy consumption. Durability tests show relatively stable results across different model specifications. The study suggests that environmental tax policies and development finance systems could play an important role in accelerating the transition to renewable energy in OECD economies.