Applied Energy 365 (2024) 123235

Contents lists available at ScienceDirect

Applied Energy
journal homepage: www.elsevier.com/locate/apenergy

Green energy transition in OECD region through the lens of economic

complexity and environmental technology: A method of moments quantile
regression perspective
Mohammad Razib Hossain a, b, Devi Prasad Dash c, Narasingha Das d, g, Ehsan Ullah e, Md.
Emran Hossain f, *
a
School of Economics and Public Policy, Adelaide Business School, The University of Adelaide, Adelaide, Australia
b
Department of Agricultural Finance and Cooperatives, Bangabandhu Sheikh Mujibur Rahman Agricultural University, Gazipur 1706, Bangladesh
c
School of Management and Entrepreneurship, Indian Institute of Technology Jodhpur, Jodhpur 342030, Rajasthan, India
d
Adnan Kassar School of Business, Lebanese American University, Beirut, Lebanon
e
Graduate School of Economics and Management, Ural Federal University, Yekaterinburg 620002, Russia
f
Department of Agricultural Sciences, Texas State University, San Marcos, TX 78666, USA
g
Advanced Research Centre, European University of Lefke, Northern Cyprus, Turkey

H I G H L I G H T S

• The impacts of economic complexity (ECI), environmental technology (ENT), natural resource rent (NRT) and energy efficiency (EFX) on green energy use
explored.
• We use novel non-parametric method of moments quantile regression approach for OECD countries.
• The ECI curbs the consumption of renewable energy while EFX is a boon for it.
• ENT and NRT have heterogenous effects on RE consumption.
• We also note different causal relationships to rectify the results’ robustness.

A R T I C L E I N F O A B S T R A C T

Keywords: Despite having multidimensional positive externalities of renewable energy (RE) in theory, the literature on RE’s
Energy transition economic and environmental determinants is still very nascent. We have addressed this research gap by
Economic complexity index considering a balanced panel of 38 OECD nations attempting a phase-by-phase energy transition. We have used
Environmental technology
data spanning from 2000 to 2020 and deployed the novel method of moments quantile regression (MMQR)
OECD nations
Renewable energy
approach. Our results unveil that economic complexity reduces the consumption of renewable energy among the
Method of moments quantile regression OECD nations, indicating that as the export becomes diversified, energy consumption at the production level
becomes more dependent on non-renewable sources. This further suggests that OECD nations are yet to meet
their renewable energy generation threshold. Moreover, energy efficiency fosters the consumption of renewable
energy, substantiating that energy efficiency and renewable energy share complementary co-movement among
the OECD nations. Furthermore, we unravel that environmental technology and natural resource rent have
heterogeneous effects on renewable energy consumption in OECD. For instance, environmental technology only
boosts RE consumption at the higher quantiles (70th to 95th), whereas revenue from natural resource rent curbs
RE consumption. Our conclusions hold after a series of robustness checks. Overall, we propose that OECD nations
should only export those products with absolute comparative advantage to reduce excessive dependence on
fossils. Additionally, investment in renewable energy technology development should be escalated to ensure
energy efficiency in the long-term.

* Corresponding author.
E-mail address: emranaerd@gmail.com (Md.E. Hossain).

https://doi.org/10.1016/j.apenergy.2024.123235
Received 13 April 2023; Received in revised form 8 March 2024; Accepted 12 April 2024
Available online 23 April 2024
0306-2619/© 2024 Elsevier Ltd. All rights reserved.
M.R. Hossain et al.
1. Introduction
The human consumption and production trajectories in the domains
of energy research are well documented in the sphere of development
literature [22]. Amid such energy-led economic development and
growing economic complexity, the trend of unsustainable urbanization
with declining green standards has emerged in cases of both developed
and emerging economies [44]. In the aspiration to achieve higher
growth rates, unbounded usage of non-renewable energy resources and
uncontrolled extraction of various natural resources have been
unleashed, resulting in pollution and higher public health costs [40]. As
a result, most economies have been in topsy-turvy conditions of resource
depletion and unsustainable growth processes [14]. This study, in this
direction, seeks to add certain new dimensions like economic
complexity into the picture to describe how sustainability and energy
efficiency can be restored in the context of developed economies like the
Organization for Economic Co-operation and Development (OECD)
economies. Hence, this study has considered a novel attempt to under­
line the importance of renewable energy consumption (RWE) regarding
the urge to restore energy efficiency and green sustainability. Recent
Sustainable Development Goals (SDGs) reports by the UN [1] have also
focused on diversifying energy sources and subsidizing various green
initiatives in exploiting better sustainable practices from the standpoint
of energy transition.
In 2010, the OECD group came out with a 10-point unique plan of
launching smart green tech initiatives to counteract rising emissions
issues and boost environmental performance. Smart innovation-led
green initiatives in the region are expected to boost the performance
of electricity production, clean coal mechanisms, and private partici­
pation in developing green fuels more significantly (OECD [61]). The
major objective behind the green growth mechanism in the region is to
foster economic amelioration and inclusive human development while
ensuring the sustainability of resource extraction and various other
environmental services.
However, one question remains unsolved: to what extent will clean
technologies ensure optimal efficiency generation across the globe?
Although few studies propose the channel of RWE and optimal natural
resource extraction as the greater modes for this, doubt remains
regarding how far sustainability will work out uniformly across econo­
mies, given that policy differentiations and inequalities persist in
achieving growth across heterogeneous territories. Sun et al. [79]
examined the impacts of the renewable energy transition on green sus­
tainability through economic complexity. Their results show that eco­
nomic complexity and renewable energy systems help decimate
Fig. 1. Green Growth performance in the European OECD economies. (For interpretation of the references to colour in this figure legend, the reader is referred to the
web version of this article.)
(Source- Author’s own estimation of data from Green Growth Index, 2019).
2
Applied Energy 365 (2024) 123235
emissions in the long-term, thus ensuring robust sustainability me­
chanics. Some studies have also percolated through development-based
literature, where it is found that better economic complexity with high
RWE intensity brings more elements of sustainability into that system
[12,43,85]. Given the policy frameworks of the OECD economies, we
present the green growth index performance in recent years to see how
major regional economies have performed comparatively between 2005
and 2019 (Green Growth Index [1]). Fig. 1, as given below, indicates
some of the key performances in terms of green growth in the region
comparatively for the years 2005 and 2019.
The diagrammatic analysis from above especially divulges that the
European economies have performed well in green development be­
tween 2005 and 2019. However, in the case of a few economies like
Russia, Greece, the UK, Italy, France, and the Netherlands, the
improvement has been marginal in the last 15 years. Notable perfor­
mances have also been reported in the case of a few northern European
and western European economies as they adopted massive policy
changes focusing on economic and environmental sustainability (Fig. 2).
While comparing, we notice that economies, especially in non-European
regions, perform poorly in addressing environmental sustainability is­
sues. Especially in Fig. 2, we notice that economies like New Zealand,
Turkey, Israel, and Costa Rica have experienced a slump in green growth
in the last 15 years. This, however, suggests the rapid depletion of forest
resources, greater importance on nonrenewable energy products, and
heavy reliance on coal-based usage. We also find that the USA and
Canada, although experiencing marginal improvements in green in­
dicators, still the issues of adoption of clean energy mechanisms remain
varied at the regional levels.
To establish the relationship between green tech opportunities in
terms of green growth and efficient utilization of natural resources in the
region, we present a formal diagrammatic analysis considering the latest
information for the OECD region (see Fig. 3). We first consider the 2019
score for green economic opportunities in terms of clean technology
initiatives and efficient resource utilization for all OECD economies. Our
diagrammatic exploration reveals that there exists a positive association
between green tech initiatives and resource utilization for the year 2019.
This also speaks about the region working synergistically with the
frameworks of COP-21 and the international climate convention. We
notice that few of the economies in this direction have performed well
below the average trend, especially economies like South Korea, Russia,
Turkey, Iceland, Spain, Canada, New Zealand, Mexico, Netherlands,
Hungary, the USA, Germany, and Israel. However, economies located in
the Scandinavian region performed better in these parameters by
maintaining a robust association between clean energy-led growth and
M.R. Hossain et al. Applied Energy 365 (2024) 123235

Fig. 2. Green Growth in case of Non-European OECD economies. (For interpretation of the references to colour in this figure legend, the reader is referred to the web
version of this article.)
(Source-Author’s own estimation of data from Green Growth Index).

Fig. 3. Relation between green efficiency through technology and resource Utilization. (For interpretation of the references to colour in this figure legend, the reader
is referred to the web version of this article.)
(Source: Author’s own compilation. Note: The country list and notations can be found in the Appendix).

resource extraction intensity. In fact, economies like Norway, Denmark,
and Sweden aim to triple their clean energy investment expenditure by
2030 and launch electronic vehicles (EVs) by completely substituting
fossil fuel-based vehicles by 2030 as well.
After analyzing the above points and keeping in mind the objectives
of this paper, we claim that this study will undoubtedly add value to the
existing literature by considering economic complexity, green technol­
ogy, and natural resource rent under one umbrella to see how sustain­
ability can be ensured in the energy transition. This is our first objective.
Second, we further endeavor to investigate the impacts of all of these
variables considering the post-2000 energy transition by looking into
the COP-21 and other international green protocols. Third, the relevance
of the implementation of green technology is well understood in this
study, whereas conventional studies seek to consider green technology
space as a subset of energy efficiency mechanisms. In our study, we seek
to establish the fact that both green technology and energy efficiency
systems impact RWE differently. We state that energy efficiency may
include improving the existing energy usage pattern; however, it may
not necessarily result from green tech in every instance.
From the empirical standpoint, this study has come up with some
unique findings. We conduct our analysis by utilizing novel methods of
moments quantile regression (MMQR) approach to see how economic
complexity, energy efficiency, green innovation, and natural resources
rent influence the RWE. First, we unravel that improvements in eco­
nomic complexity across quantiles have resulted in the deceleration of
RWE in the studied region. This indicates that growth is not entirely a
green inclusive-based approach. Second, estimates from energy effi­
ciency and green tech innovation establish a robust positive and sig­
nificant association with the RWE. However, estimates from natural
resource rent typically show that higher resource extraction rates impact
RWE negatively in the OECD region.
The remainder of the paper is organized as follows. Segment 2 pro­
vides the background with reference to the earlier literature and possible
hypotheses developed for the current study. Section 3 describes the data
and empirical methodology of the study. Segment 4 delineates the
study’s empirical and robustness checks’ findings. Lastly, Segment 5

3
M.R. Hossain et al.
rounds off this empirical attempt with conclusions and possible policy
suggestions.
2. Literature review
Being an indicator of economic development, economic complexity
reflects the productive capacity of a particular economy. Although
recent literature has realized that there exist a few degrees of associa­
tions between green development and economic complexity; however,
systematic and hypothesis-based studies in this domain remain scant as
of date for the developing, emerging, and underdeveloped economies.
Before delving into the detailed analysis of economic complexity and
green development, it is imperative on our part to analyze and present a
few previous studies in line with the studied variables of this paper.
2.1. Economic complexity and economic growth
Tabash et al. [80] have underlined the importance of the association
between economic complexity and economic growth in the contexts of
24 African economies post 1995–2017 through natural resource rents.
Their analysis demonstrates that economic complexity positively im­
pacts growth in these African economies, while natural resources rent
negatively influences economic growth. Hidalgo [39] revolutionized the
concept of economic complexity by analyzing it in relation to innova­
tion, economic growth, the spread of economic geography, and the
evolution of specialized patterns and showed that economic complexity
rather is considered one of the best measures in undertaking study
concerning economic growth. One unique study in the case of the USA
has been undertaken by [50] regression models affirmed that both
natural innovation systems and economic complexity exert positive and
significant impressions on economic growth. Laverde-Rojas and Correa
[48] proposed another seminal study considering scientific contribu­
tions and economic complexity as the best predictors for economic
growth regarding the 91 economies over the years 2003–2014. Their
findings divulge that economic complexity results in higher economic
growth. However, their findings demonstrate that the relationship is
more stable in the case of developed economies compared to other
developing or underdeveloped nations. Furthermore, the literature on
economic complexity confirms that there exists a growing interest in
measuring economic complexity in the annals of several macroeconomic
indicators over the years [19,31,55,71].
2.2. Economic complexity and economics of energy
It is evident from the literature that economic complexity perpetu­
ates energy demand and supply over time, irrespective of the nature of
the economies. Pieces of evidence suggest that underdeveloped and
emerging economies, in fact, exhibit a greater positive association be­
tween economic complexity and energy dynamics. In this section, we
intend to specify a few earlier studies showing how they co-exist in both
the short and long run across heterogeneous economies. Fang et al. [30]
examined the connection between economic complexity and energy
demand for 27 OECD economies from 1978 to 2016 and highlighted that
boost in economic complexity impresses energy demand negatively in
these economies. Neagu and Teodoru [59] studied the consequences of
economic complexity and energy consumption structures on greenhouse
gas emissions in a set of heterogeneous European economies and noticed
that economic complexity exerts more robust significant effects on
greenhouse gas emissions across the panels. However, the intensity of
economic complexity showed a more positive association with emissions
in the case of economies with lesser economic complexity. Another
study on European economies by Doğan et al. [26] unearthed that in the
presence of higher economic complexity, RWE leads to higher economic
growth over the years. Utilizing quantile regression, the authors noted
that the effects of RWE remain unequal across quantiles in the presence
of higher economic complexity; still, it has a greater role in fueling
4
Applied Energy 365 (2024) 123235
economic growth in the region. Nathaniel [58] tested the liaison be­
tween economic complexity and ecological footprint in the midst of
growing globalization for the ASEAN economies from 1990 to 2016 and
claimed that economic complexity, energy consumption, and economic
growth soared the ecological footprint in the region.
In another study, He et al. [38] analyzed the association between
globalization, energy consumption, economic complexity, and economic
growth in the case of the top 10 energy transition economies. The results
from their analysis depict that economic complexity, economic growth,
and globalization curb carbon emissions among these territories, espe­
cially in the long term. Scholarship in this domain further confirms that
economic complexity, energy demand, energy efficiency, globalization,
and economic development are highly essential in restoring environ­
mental sustainability (Yilanchi and Pata [1,17,28,51,53,57]).
2.3. Environmental technology and renewable energy consumption
In energy economics literature, the association between RWE and
green technology is a well-documented research domain. Several papers
comprising developed and emerging economies find a significant asso­
ciation between RWE and green technology [43,49,63,75]. It is well
acknowledged that economies have reaped positive externalities of
higher RWE by implementing environmentally friendly technology.
Kuang et al. [46] examined the association between green technology,
RWE, and carbon emissions in China over the years 1990–2018 and
unraveled that higher usage of green technology encourages more RWE,
thus negating the carbon emissions rates over the years.
2.4. Energy efficiency and renewable energy consumption
In terms of enthusing more renewable energy usage, it is imperative
that an energy-efficient mechanism needs to be restored in the economy.
Although it remains a widely disputed research domain, economies
other than developed ones still fail to maintain energy efficiency in the
system. Literature, as of date, provides mixed responses in this domain
[5,6,20,25]. Özbuğday and Erbas [62] examined the association be­
tween energy efficiency and RWE in curbing carbon emissions for 36
heterogeneous economies considering a period of 1971–2009 and
demonstrated that improvement in energy efficiency and higher RWE
helped curb the emissions intensity to a significant extent. Considering a
macro-scale residential energy study in the case of the USA, Brecha et al.
[16] analyzed the importance of residential energy efficiency and RWE
in the Mid-Western USA. Their findings showed that improvement in the
residential energy efficient mechanism helps encourage more RWE in
the long run.
2.5. Natural resource rent and renewable energy consumption
Scholarship in this domain divulges that unscaled and uncontrolled
natural resource exploration often results in natural resource depletion,
thus negating the RWE across the economies. Bekun et al. [15] under­
took a study analyzing the nexus between carbon emissions, natural
resource rent, and RWE in EU-16 economies for the years between 1996
and 2014. Utilizing the PMG-ARDL model, their study disclosed a pos­
itive and significant association between natural resource rent and
pollution emissions, revealing a fall in the overall share of renewable
energy in the economy. Ulucak and Ozcan [81] studied the relationship
between natural resource rent and energy consumption for OECD
economies from 1980 to 2016. Their empirical investigation showed
that higher natural resource rent depreciates the environmental quality,
resulting in higher emissions and more consumption of non-renewable
energy sources. Proofs from other articles in recent years have equally
raised concerns over the higher extraction of natural resources, which
further leads to a fall in the lesser RWE in long-run [2,3,35,70,82].
M.R. Hossain et al. Applied Energy 365 (2024) 123235

2.6. Research gap
After scrutinizing the earlier literature, we can postulate that
contemporary scholarship has widely ignored the dynamic association
between the economics of renewable energy dynamics, economic
complexity, and green technology in the quest to attain environmental
and economic sustainability. Moreover, based on the propositions of the
international climate change treaties (i.e., Kyoto Protocol, Glasgow
Climate Pact), earlier studies have assessed if renewable energy tech­
nology helped curb the emissions significantly or not, taking the top
emitter territories into account. However, the determinants of renew­
able energy generation among the top emitters and other developed
nations have received scant attention in the relevant scholarship.
Additionally, most studies on developed economies barely recognized
the importance of policy spillovers through cross-sectional dependency
approaches. Against this backdrop, this study undertakes a broad-based
approach by incorporating the newly ratified members of the OECD in
the analysis, unveiling the most dynamic association between economic
complexity, green technology, and renewable energy generation,
considering renewable energy generation as our response variable,
which most earlier studies have ignored. Our study, in this case, pro­
poses a few hypotheses, especially in the domain of RWE, as we ascertain
that increasing the RWE enhances energy efficiency. The two proposed
hypotheses of the study are as follows:
H1. Economic complexity and natural resource rent assist towards the
transition of renewable energy consumption for OECD economies during post-
2000.
H2. Improving energy efficiency mechanisms and increased usage of envi­
ronmentally friendly technologies result in a higher renewable energy con­
sumption rate in OECD economies.
3. Data and methodology
efficiency, proxied by the low carbon energy consumption and garnered
from Our World in Data repository.
Considering a general notion that economic complexity may reliably
forecast economic development and can reflect a skill-and knowledge-
based and high-tech production [69], ECI was chosen to be the primary
explanatory variable for this study. According to Apergis et al. [8], a
higher degree of ECI indicates a more dynamic economy and economic
structural transformation, which may affect RWE. Environmental tech­
nology advancement reduces non-clean energy usage and increases de­
mand for renewable energies [43]. Some argue that governments and
regulators have been inspired to strengthen environmental protection
policies to accelerate energy transformation due to growing public
awareness of green growth and the advancement of environmental
technologies. As a result, we pondered the transmission routes between
EVT and RWE, following Hu et al. [43]. On the other hand, EFX mea­
sures can range from basic acts aimed at reducing energy waste to more
complicated ones, such as building up research centres that generally
may influence the RWE of a country. As a result, we have included this in
our proposed model. Additionally, for brevity and novelty, we added
NRT, which was missing in other investigations. Finally, based on
Morshed and Hossain [56], we have suggested the equation shown
below:
RWE = f (ECI, EVT, EFX, NRT) (1)
Eq. (1) may be represented in a panel data framework after the
natural logarithmic transformation in the following way for better
interpretation:
lnRWEi,t = β0 + β1 lnECIi,t + β2 lnEVTi,t + β3 lnEFXi,t + β4 lnNRTi,t + εi,t (2)
Where the notation i (i = 1,2…, N) identifies the nation i in our
sample while N is equal to 38 and t (t = 1, …, T) specifies the period of
time considered for this study.

3.1. Description of database and model 3.2. Estimation procedures

This study examines the above-mentioned research gaps by har­ For the estimation processes, we must accomplish them step by step.
nessing a balanced panel data approach for 38 OECD economics, span­ These steps include identifying the cross-sectional dependency (CD)
ning data from 2000 to 2020. The detailed country list is attached in the issue, tracing the stationarity status, identifying the cointegrating as­
Appendix. Four variables: economic complexity (ECI), energy efficiency sociation, and estimating the long-run elasticities. The CD in a regression
(EFX), environmental or green technology (EVT), and natural resource model with a panel dataset is more likely to arise in the modern period
rent (NRT) have been chosen as explanatory variables for this study due to globalization and lack of trade barriers [34]. To determine
based on the objectives and literature gap stated above. Renewable whether the CD is present in the panel dataset utilized for this investi­
energy consumption (RWE) was chosen as the outcome variable. Table 1 gation, the Pesaran [65] test is performed. Similarly, presuming a ho­
lists the information regarding the data and their sources. RWE is mogenous slope variable when there is heterogeneity might lead to
calculated as a percentage of final energy intake, while NRT is calculated misleading results. As a result, we deployed the Pesaran and Yamagata
as a percentage of GDP. These measurements were taken from the World [67] slope heterogeneity (SH) test to determine if the data series is
Development Indicator (WDI) repository. The ECI measures the eco­ heterogeneous or not. Then, leveraging 2nd generation panel unit root
nomic complexities of the designated nations, where the data have been assessments that are resistant to CD and SH, we assessed the unit root
obtained from the Economic Complexity Atlas. The EFX is the energy responses of the determinants. The CADF and CIPS tests, frequently
referred to as the Pesaran [66] cross-sectional augmented ADF and the
Table 1 IPS tests, are the foundation of this work. Before estimating the long-run
Data information at a glance. coefficients, it is essential to check if the study’s core variables are
cointegrated or not. To avoid erroneous regression results, cointegration
Series Notation Unit of Measurement Source
among the research variables is investigated once the integrated order
Renewable energy RWE % total final energy World has been confirmed. The cointegration link between the outcome vari­
consumption consumption Development
Indicators
able (RWE) and explanatory variables has been assessed by Westerlund
Economic ECI Country complexity Economic [83], Pedroni [64], and Kao [45] cointegration tests. The Westerlund
complexity index complexity Atlas [83] test takes CD and SH issues into account, contrary to the 1st gen­
Environmental EVT Patent on OECD eration cointegration approaches.
control technology environmental control
Subsequently, the current study used Machado and Silva’s [54]
technologies
Energy efficiency EFX Low Carbon Energy Our World in Data Method of Moments Quantile Regression (MMQR) to evaluate the het­
Consumption erogeneity and distributional influences across various quantiles.
Natural Resources NRT % of GDP World Generalized median regression analysis, including different quantiles, is
rents Development used in this approach. When xi is given, the conditional quantile is
Indicators
expressed as yi , as shown in Eq. (3) below:

5
M.R. Hossain et al. Applied Energy 365 (2024) 123235

Qyi (τ Іχ i ) = xTi βτ .
However, eq. (3) does not allow unobserved country heterogeneity.
According to previous research [18,21,32,47], unobserved heterogene­
ity may be managed by concentrating on econometric theories. The
following is a rewritten version of Eq. (3) to fit the unobserved country
heterogeneity in the panel quantile regression (PQR) model:
Qyi (τ І αi , χ i ) = αi + x‘it β(τk ),
(3) nation-specific heterogeneity and the year-specific influences [34].
Lastly, while cointegration is present in panel data, it is preferable to
assess the causal direction. We choose the Dumirtescu and Hurlin
(D–H) (2012) Granger panel causality analysis to figure out the cau­
sality direction among various parameters of interest. Eq. (8) can be
used to characterize this test, obtained from independent Wald statistics.
Additionally, Fig. 4 provides a graphical presentation of the empirical
(4) econometric modeling approach utilized in the present study.

Compared to other nonlinear models, the MMQR model gives

j
∑ j
∑
yit = αi + λji yi(t− + βji xi(t− + εit (8)
trustworthy estimates in the case of nonlinear settings [10]. Further­
j) j)
j=1 j=1
more, employing MMQR has the benefit of defining the threshold by a
data-driven process rather than an exogenous method [77]. Moreover, 4. Empirical findings and discussion
MMQR allows for location-based asymmetries and can supply massive
amounts of information when constructing non-crossing estimates in 4.1. Summary statistics and correlation matrix
quantile regression [10]. Consequently, the approach is favored because
it addresses heterogeneity and endogeneity by considering asymmetric To endorse the empirical association between renewable energy
and nonlinear relationships across variables, resulting in more trust­ consumption and its selected parameters in this study, we first estimated
worthy and robust results than other PQR techniques [11]. The condi­ the summary statistics of our chosen variables. The outputs from the
tional modified panel quantile function for this study can be stated as analysis are posted in Table 2 below. It is conspicuous that all variables
follows: depict a positive mean except for ECI. The median values of all param­
Qyit (τ І αi , ζt χ it ) = αi + ζi + β1t ECI 1t + β2t EVT 2t + β3t EFX 3t + β4t NRT 4t (5) eters are positive. Variable EFX possesses the maximum mean value
(82.83), whereas regressor ECI holds the minimum mean value (− 0.31).
Where time and countries are represented by t and i, respectively. It is also notable that there are significant differences between the mean
Moreover, yit represents the RWE indicator. The random variable and median of the modeled variables, suggesting that the possibility of
{ }
probability is given as P δi + Zit‘ γ > = 1, and εit is the random error the existence of outliers is strong among the variables. Moreover, the
term, which is independent of a strict sequence of Xit that is exogenous. values of the measure of spread (standard deviation) stay well below the
This further implies that: mean except for NRT. The estimation of skewness delineates that all of
our variables are skewed with a right-hand tail distribution. The only
RWE(τІXit ) = (αi + δ1 q(τ) ) + Xit‘ β + Zit‘ γq(τ) (6)
exception is applicable for ECI, where this variable is skewed with a left-
Following Machado and Silva [54], q(τ) = FU− 1 (τ), hand tail distribution. Moreover, EVT demonstrates the longest possible
hence, P(U < q(τ) ) = τ. To solve optimization issues arising from the right-hand tail distribution among all other variables.
sample quantile the model is given as follows: Additionally, we harnessed the kurtosis analysis to validate the
∑∑ ( ( ) ) possibility of outliers or extreme values among the variables. The
minq ρτ Ait − δi + Zit‘ γ q (7)
i t
Table 2
Here ρτ (A) = (τ − 1)AI{A ≤ 0} + TAI{A > 0} represents the check
The standard description of variables.
function.
RWE ECI EVT EFX NRT
Moreover, we deployed some other models (DOLS, FMOLS, and
Driscoll-Kraay) to give credibility to the findings of our main MMQR Mean 19.162 0.947 10.490 21.701 1.459
model. For example, we harnessed the parametric dynamic OLS (DOLS) Median 14.093 1.062 9.770 17.075 0.383
Maximum 78.214 2.262 72.730 82.835 21.418
approach to check the robustness of the MMQR model, postulated by
Minimum 0.692 − 0.311 0.970 7.750 0.000
Kao and Chiang [87], which works well with panel data. However, the Std. Dev. 15.962 0.660 5.663 18.798 2.880
DOLS model overlooks cross-sectional variability. Pedroni [88,89] Skewness 1.295 − 0.217 3.689 1.215 3.480
proposed the fully modified OLS (FMOLS) as an alternative estimator Kurtosis 4.568 1.835 34.366 4.028 17.302
Observations 798 798 798 798 798
when cointegrated panels. When the sample size is small, the FMOLS
Jarque-Bera (JB) 304.971 51.415 34,522.100 231.348 8412.637
estimate is a non-parametric technique that corrects for endogeneity and Probability 0.000 0.000 0.000 0.000 0.000
serial correlation and frequently yields a more consistent result than the Correlation Matrix
DOLS estimator. The FMOLS allows for cross-sectional heterogeneity in RWE 1
the reverse or alternate hypothesis, and the estimates are asymptotically ECI − 0.358 1
EVT 0.042 − 0.134 1
unbiased and consistent [90]. The Driscoll-Kraay fixed-effect-OLS
EFX 0.710 0.120 − 0.082 1
framework establishes standard errors resistant to autocorrelation, NRT 0.260 − 0.386 0.185 0.091 1
heteroscedasticity, and cross-sectional dependency, and it also considers

Fig. 4. Estimation flow diagram.

6
M.R. Hossain et al. Applied Energy 365 (2024) 123235

estimation results unveil that all variables possess heavier tails, signifi­ Table 4
cantly different from the normal distribution, given that the gauged Delta test for SH.
figures are well above the threshold limit three. The only exception is Models Coefficient p-
ECI, where this variable demonstrates a lighter tail distribution, given value
that the value (1.835) stays well below the threshold level. Thus, Static Model Δ 11.531*** 0.000
through the kurtosis analysis, we can corroborate that outliers or Δ 16.644*** 0.000
extreme values are present among the variables and that the distribution adj.
of the tails significantly differs from the normal distribution. This result HAC model for accounting autocorrelation in Δ 7.523*** 0.000
residual 9.466*** 0.000
is also further supported by the outcomes of the JB test and its proba­
Δ
adj.
bility values. Based on this outcome, it is discernible that we need to
apply econometric modeling that can tackle the non-normal distribu­ Note: ‘***’ divulges a 1% significance level.
tion. To meet this requirement, we have deployed the newly emerged
novel Method of Moments Quantile Regression (MMQR) approach,
Table 5
given that this approach works well in an asymmetric setting. We have
2nd generation panel unit-root test.
also estimated the correlation matrix (see lower section of Table 2)
Variables CIPS CIPS 1st CADF CADF 1st
among our candidate variables. It is perceptible that ECI is negatively
Difference Difference
correlated with RWE, and EVT is positively correlated with RWE but
negatively correlated with ECI. Moreover, EFX is non-negatively corre­ RWE − 2.176** − 4.700*** − 1.463 − 3.615***
ECI 1.439 2.987*** 1.869 2.361***
lated with RWE and ECI, whereas negatively correlated with EVT.
− − − −
EVT − 3.130*** − 4.833*** − 2.952*** − 3.551***
Finally, EVT positively correlates with all other variables except for ECI. EFX − 2.219** − 4.237*** − 2.127** − 3.196***
Additionally, from the findings of the correlation matrix, we can further NRT − 2.206** − 4.186*** − 2.066** − 3.679***
endorse that there is no issue of multicollinearity among our designated Note: ‘***’ p < 0.01; ‘**’ p < 0.05; ‘*’ p < 0.10.
variables, corroborating that the regression analysis will be free from
spuriously regressed outcomes.
determinants. The aftermaths of the cointegration tests are presented in
Table 6 below. We assessed the cointegrating association by harnessing
4.2. CD, SH, unit root, and cointegration test findings the Kao [45], Pedroni [64], and Westerlund [83] tests. According to the
Kao [45] test statistics, 3 out of 5 test statistics substantiate that long-
The outcomes of the CD test followed by Pesaran [65] are posted in term co-movement exists between RWE and its stipulated de­
Table 3 below. It is discernible from the observations that the test sta­ terminants among the OECD nations. However, we have harnessed the
tistics are very high and significant at a 1% significance level, indicating Augmented Dickey-Fuller t statistic to reach our conclusion. Moreover,
that we cannot reject the null hypothesis of cross-sectional indepen­ the Pedroni [64] cointegration test divulges that all test statistics
dence. In other words, the CD test affirms that the OECD nations have vindicate the existence of the long-term co-movement between RWE and
mentionable similarities among themselves in terms of cross-country its attributed regressors. Finally, we justified the above findings through
characteristics, which is an issue for the panel data modeling. There­ the second generation Westerlund [83] cointegration test, which also
fore, to surpass this issue, we are bound to harness the second- comply that long-term cointegration is present between RWE, ECI, EVT,
generation econometric approaches, given that the first-generation ap­ EFX, and NRT among the OECD countries, where RWE is the response
proaches fail to account for the CD issue in the estimation process. variable and others being the exposure variables of our model.
Further, Table 4 hosts the outcomes of the SH test followed by Pesaran
and Yamagata [67]. After a critical assessment of the results, we can 4.3. Main findings of the MMQR approach
claim that the slope coefficients are heterogeneous, given that the esti­
mated coefficients are highly significant at a 1% level, which again After ascertaining that our response variable (RWE) and predictor
verifies that we must rely on second-generation econometric approaches variables (ECI, EVT, EFX, and NRT) share a long-term co-movement, it is
to overcome these uninvited issues. time to unravel how the dependent variable truly responds due to the
As advocated by the CD and SH tests above, we have deployed the shock on the explanatory variables. To obtain the estimates of the co­
2nd generation unit root tests to scrutinize the stationarity status of our efficients, we have deployed the novel MMQR approach, which can
designated variables. We took advantage of the cross-sectional unveil the dynamic association between the response variable and
augmented Im, Pesaran, and Shin (CIPS) panel unit root and CADF exposure variables at heterogenous quantiles. We have posted the re­
tests articulated by Pesaran [66] to justify the stationarity criteria of our sults in Table 7 below. We have demonstrated the outcomes from the 5th
designated variables. The outcomes are displayed in Table 5 below. It is to 95th quantiles.
apparent that both CIPS and CADF tests endorse that there is no unit root
issue among the adopted variables after the first difference. Putting it
Table 6
differently, the unit-roots of all of our hand-picked variables lie within Co-integration test outcomes.
the unit circle after the first difference. Hence, there is no unit root issue.
Test statistics p-value
We exploited several co-integration tests in the next stage to ascer­
tain the long-term association between RWE and its selected Results from Westerlund [83]
2.293*** 0.011
Results from Pedroni [64]
Table 3 Modified Phillips-Perron t 3.454*** 0.003
Cross-sectional dependency test. Phillips-Perron t − 5.154*** 0.000
Augmented Dickey-Fuller t − 4.379*** 0.000
Variable CD-test p-value Corr Abs (Corr)
Results from Kao [45]
RWE 17.575*** 0.000 0.14 0.50 Modified Dickey-Fuller t 0.654 0.257
ECI 5.082*** 0.000 0.04 0.46 Dickey-Fuller t − 0.165 0.434
EVT 45.293*** 0.000 0.37 0.47 Augmented Dickey-Fuller t 4.711*** 0.000
EFX 37.556*** 0.000 0.31 0.55 Unadjusted modified Dickey-Fuller t − 3.943*** 0.000
NRT 35.196*** 0.000 0.29 0.44 Unadjusted Dickey-Fuller t − 3.266*** 0.001

Note: ‘***’ divulges a 1% significance level. Note: ‘***’ divulges a 1% significance level.

7
M.R. Hossain et al. Applied Energy 365 (2024) 123235

The aftermaths in Table 7 elucidate that the ECI is significant across

− 15.280***
all quantiles and negatively impresses renewable energy consumption.

− 0.860***

26.685***
0.529***

0.758***
We did not find any heterogeneity regarding the signs of the coefficients

(1.169)

(0.203)

(0.040)

(0.225)

(2.493)
0.95
across different quantiles. However, the negative influences become
stronger as we move across the higher quantiles. For instance, a 1%
elevation in ECI curtails the overall consumption of renewables by

− 13.765***
5.92% in the 5th quantile, whereas the same elevation dwindles the

− 0.557***

22.465***
0.723***
0.397**
renewables consumption by 15.3% in the 95th quantile. The ECI is a

(0.937)

(0.162)

(0.032)

(0.180)

(1.991)
0.90

newly built index that captures a nation’s production efficacy and export
capability. A higher index indicates that a country is doing well
regarding its export diversification and product quality development
− 12.591***

[27,84]. Variations in export and richness in the export basket un­

19.193***
− 0.321**
0.695***
0.295**

doubtedly forecast a nation’s manufacturing capacity, industrial health,

(0.759)

(0.134)

(0.026)

(0.145)

(1.616)
0.80

and underlying comparative advantage in export. Rapid industrializa­

tion consistently requires an incessant supply of electricity, where the
raw materials for the generation of this “superpower” are sourced from
− 11.781***

multiple sources (i.e., historical fossil fuels, renewable energy options,

16.935***
0.677***

− 0.159
(0.665)

(0.118)

(0.023)

(0.127)

(1.421)

nuclear energy). Any disruption in the supply chain of these raw ma­
0.224*
0.70

terials can significantly affect the export quality of a particular nation.

According to the Observatory of Economic Complexity [60] index
rankings, most of the OECD nations remain at the top of the list of being
− 11.113***

the most economically complex nations in the world. The negative as­
15.074***
0.661***

− 0.026
(0.609)

(0.108)

(0.021)

(0.117)

(1.304)

sociation between RWE and ECI can be attributed to the energy con­
0.166
0.60

sumption structure and energy basket of the OECD nations. Despite the
call for a transition to renewable energies [41,42], the energy mix of the
OECD nations is still dominated by old-school fossils. The OECD nations
− 10.526***

13.440***

are still passionately married to fossils, given that fossils are easily
0.647***
(0.579)

(0.103)

(0.022)

(0.111)

(1.239)

accessible and available. Besides, the OECD nations know that any
0.114

0.092
0.50

compromise in the production of commodities in which they have

comparative advantages will significantly negatively affect their eco­
nomic activities. Therefore, the opportunity cost of decoupling the fos­
− 9.975***

11.904***
0.635***

sils of industrial output will be too high as this will send the OECD
(0.571)

(0.101)

(0.020)

(0.109)

(1.218)
0.202*
0.066

countries into a more profound economic depression, curtailing

0.40

renewable energy consumption. Our observations are in line with Li

et al. [52] among the top exporting nations and Shahzad et al. [74] in
− 9.237***

the USA.
0.618***

0.350***

9.847***
(0.587)

(0.101)

(0.020)

(0.113)

(1.248)

Regarding the influence of EVT on the RWE, our findings unravel

0.002
0.30

that the effects are heterogeneous across different quantiles, where we

note negative associations in the 5th, 10th, and 20th quantiles and
positive associations among the 30th to 95th quantiles. However, the
Note: Standard errors are presented in parentheses, ***p < 0.01, **p < 0.05, *p < 0.1.
− 8.452***

0.599***

0.507***

7.661***

coefficients from the 10th to the 60th quantiles are not statistically
− 0.067
(0.628)

(0.111)

(0.021)

(0.120)

(1.335)

significant. However, if we deduct the negative influence from the lower

0.20

quantiles (5th to 20th), it becomes evident that green technology is a

boon for the consumption of renewables. Putting it differently, a 1%
upheaval in the EVT boosts the consumption of renewable power by
− 7.250***

0.571***

0.748***

4.310***
− 0.172
(0.767)

(0.133)

(0.026)

(0.147)

(1.631)

0.53% at the 95th quantile. Earlier scholarship in green growth and

0.10

technology development also noted identical observations (see

[23,29,63]). Green technology development shares a symbiotic
connection with the production and consumption of renewable energies.
− 5.927***
Quantiles

Transitioning to renewables can be costly, given that the process re­

0.541***

1.013***
− 0.287*
(0.930)

(0.163)

(0.032)

(0.178)

(1.995)

quires an investment of billions of dollars as a fixed cost to set up the

0.623
Method of Moments Quantile Regression outcomes.

0.05

production facility of renewable electricity. These fixed costs include the

investment towards environment-friendly technologies, the construc­
tion of eco-friendly buildings and cities, and the investment for man­
− 2.157***

− 0.432***
0.188***

0.050***

6.011***

aging renewable waste that can be deleterious for the environment.

(0.393)

(0.070)

(0.013)

(0.075)

(0.832)
Scale

However, once the system is ready to generate renewable electricity, the

total return in the form of monetary and environmental benefits will
outweigh the overall costs. Moreover, green technology boosts total
− 10.629***

factor productivity and thereby enhances the level of total profit across
13.727***
Location

0.650***

enterprises [78]. Given that the crude oil market is highly volatile [4]
− 0.071
(0.586)

(0.104)

(0.020)

(0.112)

(1.240)
0.123

and that the fossils will run out in the next few decades, renewables will
be the dominating source of power replacing the fossils phase by phase
across the OECD countries. Therefore, as renewables will be the only
Variables

game in the town, green technology will undoubtedly be a boon for the
Table 7

_cons

production and consumption of renewables across the OECD nations.

NRT
EVT

EFX
ECI

Moreover, the impression of EFX on RWE is significantly positive,

8
M.R. Hossain et al.
where the coefficients are significant at a 1% level. The result delineates
that a 1% surge in efficient energy usage boosts renewable energy
consumption by 0.54% and 0.75% at the 5th and 95th quantiles across
the OECD nations, respectively. Further, the positive effect becomes
impregnable as we move from lower to higher quantiles. Energy effi­
ciency is a broad concept circumscribing energy usage’s economic, so­
cial, and environmental consequence. In this context, energy efficiency
means effective energy usage without wasting it in the process of pro­
duction, distribution, and consumption thereby ensuring a holistic
advantage for the individual, society, and the environment. Apart from
the environmental costs of fossil fuel, there is another crucial loophole in
fossil energy consumption, and that is energy efficiency. Renewable
energies are more energy efficient compared to fossils, which has been
substantiated by many of the OECD nations. For example, Australia is a
member of the OECD and is rich in renewable and fossil energy options.
The Australian policymakers and higher authorities have identified that
renewable electricity can be more cost-effective in Australia compared
to electricity sourced from non-renewable sources, given that renewable
electricity is sourced from natural resources (i.e., solar, wind), which are
infinite compared to non-renewable electricity which is sourced from
resources that are finite [9]. Moreover, another interesting fact about
renewable power is that it can be stored and used whenever required.
The lithium-ion battery is the best example of this kind. Recent schol­
arship on energy efficiency claims that efficient energy usage enhances
environmental sustainability [7], mitigates energy poverty, and boosts
green growth through renewable energy technology [36,86]. As the call
for energy transition is proliferating, the apparent benefit (i.e., energy
efficiency) of renewable energy can genuinely enhance the consumption
of renewables among the OECD nations.
Finally, the impression of NRT on the RWE is heterogeneous across
different quantiles (see Table 7). It is conspicuous that from the lower
quantiles to the median quantile (5th quantile to 50th quantile), NRT
positively affects RWE, where the magnitude of the effect declines as we
move from the 5th to 50th quantile. For example, a 1% upsurge in NRT
elevates RWE by 1.01% in the 5th quantile; however, the exact change
elevates RWE by 0.20% at the 40th quantile, indicating the diminishing
trend of the magnitude of the effect. Moreover, after the 50th quantile,
we observe that NRT is negatively affecting RWE among the OECD na­
tions, where the negative impression becomes surprisingly acute as we
move towards the higher quantiles (i.e., from the 60th to 95th quan­
tiles). In other words, a 1% increase in NRT dwindles the consumption of
renewables by 0.32% and 0.86% in the 80th and 95th quantiles,
respectively. The apparent paradox in the effect of NRT on RWE can be
attributed to the following. The positive association between NRT and
RWE in the lower to median quantiles suggests that the revenue earned
from the sale of natural resources has been harnessed to develop
renewable energy sources, which boosted the consumption of total en­
ergy sourced from the renewable sectors. This is homogenous with the
findings of Qadir et al. [68] and Shahbaz et al. [73]. Additionally, the
non-positive connection between NRT and RWE across the higher
quantiles can be attributed to the volatility in the oil price, the burst of
the oil price bubble, and the malfunctioning of the resource market to
get cleared by itself without any exogenous intervention, induced from
demand and supply mismatch. Volatilities influenced by price un­
certainties and the disequilibrium of the resource market can signifi­
cantly affect the revenue earned from the sale of natural resources,
which can negatively affect the investment in the renewable industry,
ultimately affecting the production and consumption levels of renew­
able electricity across the OECD nations. This observation is in line with
Shah et al. [72].
Regarding the coefficients of the location effect, we observe that only
the coefficients of ECI and EFX are significant. The negative sign of ECI
means that ECI curtails the dispersion of renewable energy consump­
tion, whereas the positive sign of EFX delineates that it soars the
dispersion of RWE. Contrarily, regarding the coefficients of the scale
effect, we unveil that all the coefficients are significant at a 1% level. The
9
Applied Energy 365 (2024) 123235
positive signs of EVT and EFX establish that EVT and EFX increase the
conditional distribution of RWE from the 5th to 95th quantiles, whereas
the negative signs of ECI and NRT dwindle the conditional distribution
from lower to higher quantiles. Apart from the quantitative analysis, we
have also conducted a visual analysis to easily understand the outcomes.
Fig. 5 below portrays the graphical outcomes of the MMQR regression.
4.4. Robustness check
To put empirical credibility on the findings of the MMQR model, we
have deployed three different conventional panel regression ap­
proaches, FMOLS, DOLS, and the Driscol-Kraay (DK) regression model.
The outcomes obtained from all three regression models are presented in
Table 8 below. From a brief review, it is perceptible that the signs and
dimensions of the coefficients of all designated exposure variables under
all three regression models are identical. Most importantly, the results
displayed in Table 8 perfectly mimic the findings of the MMQR approach
posted in Table 7 above. Based on the Driscol-Kraay estimates, a 1% rise
in ECI curbs the consumption intensity of renewable energies by 10.63%
among the OECD nations, whereas the exact change in ECI condenses
the consumption of renewable energy options by 4.9% and 3.4% under
FMOLS and DOLS regression models, respectively. It is noticeable that
the DK approach suggests the maximum negative response in RWE
compared to the other two methods, which mimics the outcome that we
noted in the higher quantiles under the MMQR approach. This conclu­
sion is in line with Hassan et al. [37] in the context of selected OECD
nations and with Li et al. [52] in the context of top exporting nations.
Moreover, regarding the effect of EVT on RWE, a 1% boost in the
adoption capacity of environmental technology escalates the consump­
tion intensity of renewable energy among the OECD nations by 0.7%,
0.8%, and 0.1% according to the FMOLS, DOLS, and DK approaches,
respectively. This again certifies that the outcome of the MMQR model is
robust and replicable. This observation is also in line with Bamati and
Raoofi [13], Danish and Ulucak [24], and Shao et al. [76]. Furthermore,
the findings in Table 8 also substantiate that energy efficiency can be a
boon for renewable energy consumption. Thus, a 1% upsurge in EFX
inflates the consumption intensity of renewables by 0.6%, 0.6%, and
0.7% among the OECD nations, based on the FMOLS, DOLS, and DK
regression models, respectively. This is parallel to what Gökgöz and
Güvercin [33] highlighted in the EU. Finally, all three approaches
vindicate that natural resource rent is detrimental to the growth of
renewable energy among the OECD nations. This observation mimics
what we highlighted in the upper quantiles under the MMQR approach.
However, the MMQR approach also disclosed a positive association in
the NRT-RWE nexus in the lower quantiles, which the traditional
regression models have failed to capture. Therefore, we can claim that
the MMQR approach is superior to the conventional panel regression
models, given that it assists in tracing the genuine relationship between
the response and exposure variables at heterogenous quantiles. Overall,
taking reference from Table 8, we claim that our findings are robust and
replicable.
4.5. D-H causality test outcomes
We extended our empirical analysis by incorporating the causal as­
sociations among the designated variables. We have harnessed the D–H
causality test to accomplish this endeavor. The outcomes are posted in
Table 9 below. It is apparent that there is no feedback hypothesis
running between the RWE and its selected determinants. This aftermath
further endorses that our econometric model is free from any causality-
induced endogeneity issue, which also corroborates that the results are
robust and replicable. We reject the null hypothesis the ECI does not
Granger cause RWE at a 1% significance level, divulging that ECI is an
important determinant of renewable energy consumption across the
OECD countries. Similarly, a unidirectional causality runs from EVT to
RWE, significant at a 1% level. However, the relationship does not hold
M.R. Hossain et al. Applied Energy 365 (2024) 123235

Fig. 5. Graphical presentation of panel quantile results.

5. Conclusion and policy insights

Table 8
Model robustness results through panel FMOLS, DOLS, and Driscol-Kraay.
The transition from an oil-dependent economic system to renewable
Variables FMOLS DOLS Driscol-Kraay energy is crucial to meet the objectives outlined in the latest COP26
ECI − 4.911*** − 3.453*** − 10.629*** agenda. Thus, the current study examined the connections between
(1.040) (1.004) (0.274) economic complexity, environmental technology, energy efficiency,
EVT 0.710*** 0.793*** 0.123* natural resource rent, and renewable energy usage in 38 OECD member
(0.112) (0.191) (0.063)
EFX 0.636*** 0.597*** 0.650***
states during the last two decades (2000− 2020). The analysis employs a
(0.041) (0.051) (0.010) variety of second-generation panel data estimation approaches,
NRT − 0.505** − 0.489* − 0.071 demonstrating that the parameters are stationary and cointegrated. For
(0.250) (0.207) (0.241) parameter estimation in various quantiles, a unique approach of
Note: Standard errors are presented in parentheses, ***p < 0.01, **p < 0.05, *p moment quantile regression was applied in the analysis. To examine the
< 0.1. robustness of the MMQR model, this study also applied several panel
econometric approaches, including FMOLS, DOLS, and the Driscoll-
Kraay fixed effect regression techniques. Finally, this study also
Table 9 employed the Dumirtescu and Hurlin panel causality test.
D–H causality test results. The results indicate that the economic complexity is significant
Null Hypothesis F-Statistic Prob. across all quantiles and has a non-positive impression on renewable
ECI does not Granger cause RWE 4.337*** 0.002 energy consumption. Our estimations divulge that the impressions of
RWE does not Granger cause ECI 1.201 0.385 environmental technology on renewable energy consumption are het­
EVT does not Granger cause RWE 3.520*** 0.008 erogeneous across different quantiles, with negative associations in the
RWE does not Granger cause EVT 2.923 0.188 5th, 10th, and 20th quantiles and favorable associations in the 30th to
EFX does not Granger cause RWE 8.922*** 0.000
RWE does not Granger cause EFX 0.5511 0.531
95th quantiles. Additionally, the impact of energy efficiency on
NRT does not Granger cause RWE 3.580*** 0.005 renewable energy consumption is noticeably beneficial throughout all
RWE does not Granger cause NRT 3.026 0.122 the quantiles across the OECD countries. Lastly, the consequence of
Note: ‘***’ divulges a 1% significance level. natural resource rent on renewable energy consumption varies signifi­
cantly among quantiles. It is also notable that natural resource rent
favorably influences renewable energy consumption from the lower
the other way around. We can also verify that unidirectional causality
quantiles to the median quantile (5th quantile to 50th quantile). Inter­
runs from EFX to RWE and NRT to RWE. Overall, the results of the D–H
estingly, we see that natural resource rent negatively impacts renewable
causality test unveil that renewable energy consumption intensity across
energy consumption among OECD countries beyond the 50th quantile.
the OECD nations significantly confides on the decisions of what these
The results from FMOLS, DOLS, and the Driscol-Kraay regression model
nations export, on the tendency to adopt environment-friendly tech­
demonstrate our findings are reliable and robust. According to the
nologies, on the urge to attain efficiency in energy usage patterns, and
causality findings, we determined that the ECI, EVT, EFX, and NRT do
on the overall stability of the natural resource market. Thus, the OECD
Granger cause RWE unidirectionally in the OECD region.
nations should only export those commodities in which they have a
comparative advantage, should boost investment in the development of
more environment-friendly technologies, and should escalate the effi­ 5.1. Policy implications
ciency of energy use by relying more on renewable sources and cur­
tailing the distribution loss in the consumption process. Several policy insights can be prescribed from the findings of this
article. First, the positions of the OECD nations in the ECI ranking
delineate that ameliorating their industrial sectors highly drives the

10
M.R. Hossain et al. Applied Energy 365 (2024) 123235

economic structure of these countries. The OECD member countries hold
the most significant chunk of global market share regarding the export of
skilled and high-quality products, which is in line with the ECI indices.
The role of energy cannot be ignored in the process. Industrial produc­
tion or production in which the nations have relatively better compar­
ative advantage does not get disrupted if it confides more on fossils.
Thus, we propose that OECD nations only export those products with
comparative advantage to curtail exorbitant fossil dependence and
augment renewable energy consumption.
Second, numerous OECD economies, like the US, Germany, Japan,
and many European nations, have cutting-edge technology and vast
experience in creating eco-friendly, low-carbon energy sources. There­
fore, the authorities of these nations should invest more in developing
eco-friendly or green technologies products or patent registration as it
boosts renewable energy consumption. Initially, the cost may be higher,
but the country will be benefited in the long term. Besides, the gov­
ernments of OECD countries can start campaigns to raise public
awareness of environmental issues, offer subsidies and incentives, and
offer tax breaks and rebates for adopting renewable energy sources. The
laws and regulations can be devised by the policymakers to, for instance,
promote technology transfer and export. Thirdly, the OECD nations
must promote a low-carbon lifestyle that includes utilizing home
equipment that uses green energy and is more energy-efficient. This
approach can encourage the growth of environmentally friendly busi­
nesses while encouraging individuals to develop healthy habits of using
green energy. For policymakers, it would be beneficial to fund energy
efficiency programs and undertake public-private partnership in­
vestments (PPPI) to boost renewable energy. Additionally, PPPI can
lessen overdependence on resource extraction and its volatility, both of
which can have a detrimental impact on renewable energy consumption.
As an alternative, PPPI can guarantee a consistent renewable energy
generation and consumption flow.
The ECI-RWE nexus can be the subject of future study using a
worldwide sample, freshly industrialized nations, oil-exporting nations,
and net oil-importing nations. To develop more pertinent and innovative
policies, researchers might investigate the mediating roles of public-
private partnerships and climate finance with economic complexity.
CRediT authorship contribution statement
Mohammad Razib Hossain: Writing – review & editing, Writing –
original draft, Conceptualization. Devi Prasad Dash: Writing – original
draft, Software, Resources, Investigation. Narasingha Das: Writing –
original draft, Investigation, Formal analysis, Data curation, Conceptu­
alization. Ehsan Ullah: Writing – review & editing, Visualization,
Validation, Project administration. Md. Emran Hossain: Writing – re­
view & editing, Writing – original draft, Supervision, Project adminis­
tration, Conceptualization.
Declaration of competing interest
The authors declare that they have no known competing financial
interests or personal relationships that could have appeared to influence
the work reported in this paper.
Data availability
Data will be made available on request.

Appendix

Abbreviated Acronyms Used for the Country for Figs. 1, 2 and 3.

Country ID Country ID

Sweden SWE Netherlands NEL

Denmark DEN United Kingdom UK
Germany GER Spain ESP
Czech Republic CZR Greece GRE
Austria AUT Luxembourg LUX
Finland FIN Ireland IRE
Slovakia SLV Iceland ICE
Switzerland SWT New Zealand NZ
Lithuania LTH Australia AUS
Hungary HUN Japan JPY
Slovenia SLN South Korea SK
Portugal POR Turkey TUR
Estonia ESN Israel ISR
Latvia LAT USA USA
Belgium BEL Canada CAN
Poland POL Mexico MEX
France FRA Colombia COL
Italy ITA Costa Rica COS
Norway NOR Chile CHL

References resource-rich African countries? The role of institutional quality. Energy Policy
2022;164:112888.
[4] Ahmed AD, Huo R. Volatility transmissions across international oil market,
[1] Acosta. Green Growth Index 2020. GGGI Technical ReportNo, 16; 2020.
commodity futures and stock markets: empirical evidence from China. Energy Econ
[2] Adebayo TS, Akadiri SS, Adedapo AT, Usman N. Does interaction between
2021;93:104741. https://doi.org/10.1016/j.eneco.2020.104741.
technological innovation and natural resource rent impact environmental
[5] Akram R, Chen F, Khalid F, Huang G, Irfan M. Heterogeneous effects of energy
degradation in newly industrialized countries? New evidence from method of
efficiency and renewable energy on economic growth of BRICS countries: a fixed
moments quantile regression. Environ Sci Pollut Res 2022;29(2):3162–9.
effect panel quantile regression analysis. Energy 2021;215:119019.
[3] Adekoya OB, Ajayi GE, Suhrab M, Oliyide JA. How critical are resource rents,
[6] Akram R, Chen F, Khalid F, Ye Z, Majeed MT. Heterogeneous effects of energy
agriculture, growth, and renewable energy to environmental degradation in the
efficiency and renewable energy on carbon emissions: evidence from developing
countries. J Clean Prod 2020;247:119122.

11
M.R. Hossain et al.
[7] Alam MS, Alam MN, Murshed M, Mahmood H, Alam R. Pathways to securing
environmentally sustainable economic growth through efficient use of energy: a
bootstrapped ARDL analysis. Environ Sci Pollut Res 2022;1-15. https://doi.org/
10.1007/s11356-022-19410-9.
[8] Apergis N, Can M, Gozgor G, Lau CKM. Effects of export concentration on CO2
emissions in developed countries: an empirical analysis. Environ Sci Pollut Res
2018;25(14):14106–16.
[9] Australian Government. Renewable Energy. Accessed 08 October, 2022. Available
from: Renewable energy, energy.gov.au; 2022.
[10] Awan A, Abbasi KR, Rej S, Bandyopadhyay A, Lv K. The impact of renewable
energy, internet use and foreign direct investment on carbon dioxide emissions: A
method of moments quantile analysis. Renew Energy 2022;189:454–66.
[11] Awan A, Alnour M, Jahanger A, Chukwuma OJ. Do technological innovation and
urbanization mitigate carbon dioxide emissions from the transport sector? Technol
Soc 2022;102128.
[12] Azizi Z. The threshold effect of economic complexity on energy consumption in
Iran using smooth transition regression model. J Appl Econ Stud Iran 2020;8(32):
103–27.
[13] Bamati N, Raoofi A. Development level and the impact of technological factor on
renewable energy production. Renew Energy 2020;151:946–55. https://doi.org/
10.1016/j.renene.2019.11.098.
[14] Bekun FV. Race to carbon neutrality in South Africa: what role does environmental
technological innovation play? Appl Energy 2024;354:122212.
[15] Bekun FV, Alola AA, Sarkodie SA. Toward a sustainable environment: Nexus
between CO2 emissions, resource rent, renewable and nonrenewable energy in 16-
EU countries. Sci Total Environ 2019;657:1023–9.
[16] Brecha RJ, Mitchell A, Hallinan K, Kissock K. Prioritizing investment in residential
energy efficiency and renewable energy—A case study for the US Midwest. Energy
Policy 2011;39(5):2982–92.
[17] Caglar AE, Zafar MW, Bekun FV, Mert M. Determinants of CO2 emissions in the
BRICS economies: the role of partnerships investment in energy and economic
complexity. Sustain Energy Technol Assess 2022;51:101907.
[18] Canay I. A simple approach to quantile regression for panel data. Economy J 2011;
14(3):368–86.
[19] Chávez JC, Mosqueda MT, Gómez-Zaldívar M. Economic complexity and regional
growth performance: evidence from the Mexican economy. Rev Regional Stud
2017;47(2):201–19.
[20] Chen C, Hu Y, Karuppiah M, Kumar PM. Artificial intelligence on economic
evaluation of energy efficiency and renewable energy technologies. Sustain Energy
Technol Assess 2021;47:101358.
[21] Cheng C, Ren X, Dong K, Dong K, Wang Z. How does technological innovation
mitigate CO2 emissions in OECD countries? Heterogenous analysis using panel
quantile regression. J Environ Manage 2021;280:1–12.
[22] Cherp A, Vinichenko V, Jewell J, Brutschin E, Sovacool B. Integrating techno-
economic, socio-technical and political perspectives on national energy transitions:
A meta-theoretical framework. Energy Res Soc Sci 2018;37:175–90.
[23] Danish, Ulucak R. How do environmental technologies affect green growth?
Evidence from BRICS economies. Sci Total Environ 2020;712:136504. https://doi.
org/10.1016/j.scitotenv.2020.136504.
[24] Danish, Ulucak R. Renewable energy, technological innovation and the
environment: a novel dynamic auto-regressive distributive lag simulation. Renew
Sustain Energy Rev 2021;150:111433. https://doi.org/10.1016/j.
rser.2021.111433.
[25] Depoorter V, Oró E, Salom J. The location as an energy efficiency and renewable
energy supply measure for data centres in Europe. Appl Energy 2015;140:338–49.
[26] Doğan B, Balsalobre-Lorente D, Nasir MA. European commitment to COP21 and
the role of energy consumption, FDI, trade and economic complexity in sustaining
economic growth. J Environ Manage 2020;273:111146.
[27] Doğan B, Driha OM, Balsalobre Lorente D, Shahzad U. The mitigating effects of
economic complexity and renewable energy on carbon emissions in developed
countries. Sustain Dev 2021;29(1):1–12.
[28] Dogan E, Madaleno M, Taskin D, Tzeremes P. Investigating the spillovers and
connectedness between green finance and renewable energy sources. Renew
Energy 2022;197:709–22.
[29] Du K, Li P, Yan Z. Do green technology innovations contribute to carbon dioxide
emission reduction? Empirical evidence from patent data. Technol Forecast Soc
Change 2019;146:297–303. https://doi.org/10.1016/j.techfore.2019.06.010.
[30] Fang J, Gozgor G, Mahalik MK, Padhan H, Xu R. The impact of economic
complexity on energy demand in OECD countries. Environ Sci Pollut Res 2021;28
(26):33771–80.
[31] Gala P, Rocha I, Magacho G. The structuralist revenge: economic complexity as an
important dimension to evaluate growth and development. Braz J Political Econ
2018;38:219–36.
[32] Galvo AJ. Quantile regression for dynamic panel with fixed effects. J Econ 2011;
164(1):142–57.
[33] Gökgöz F, Güvercin MT. Energy security and renewable energy efficiency in EU.
Renew Sustain Energy Rev 2018;96:226–39. https://doi.org/10.1016/j.
rser.2018.07.046.
[34] Gyamfi BA, Adebayo TS. Do natural resource volatilities and renewable energy
contribute to the environment and economic performance? Empirical evidence
from E7 economies. Environ Sci Pollut Res 2022:1–13.
[35] Gyamfi BA, Onifade ST, Nwani C, Bekun FV. Accounting for the combined impacts
of natural resources rent, income level, and energy consumption on environmental
quality of G7 economies: a panel quantile regression approach. Environ Sci Pollut
Res 2022;29(2):2806–18.
12
Applied Energy 365 (2024) 123235
[36] Hao LN, Umar M, Khan Z, Ali W. Green growth and low carbon emission in G7
countries: how critical the network of environmental taxes, renewable energy and
human capital is? Sci Total Environ 2021;752:141853. https://doi.org/10.1016/j.
scitotenv.2020.141853.
[37] Hassan ST, Batool B, Wang P, Zhu B, Sadiq M. Impact of economic complexity
index, globalization, and nuclear energy consumption on ecological footprint: first
insights in OECD context. Energy 2022;125628. https://doi.org/10.1016/j.
energy.2022.125628.
[38] He K, Ramzan M, Awosusi AA, Ahmed Z, Ahmad M, Altuntaş M. Does globalization
moderate the effect of economic complexity on CO2 emissions? Evidence from the
top 10 energy transition economies. Front Environ Sci 2021;9:778088.
[39] Hidalgo CA. Economic complexity theory and applications. Nat Rev Phys 2021;3
(2):92–113.
[40] Hossain ME, Islam MS, Bandyopadhyay A, Awan A, Hossain MR, Rej S. Mexico at
the crossroads of natural resource dependence and COP26 pledge: does
technological innovation help? Resourc Policy 2022;77:102710.
[41] Hossain MR. Can small-scale biogas projects mitigate the energy crisis of rural
Bangladesh? A study with economic analysis. Int J Sustain Energy 2020;39(8):
744–60. https://doi.org/10.1080/14786451.2020.1749056.
[42] Hossain MR. Inward foreign direct investment in Bangladesh: do we need to
rethink about some of the macro-level quantitative determinants? SN Business
Econ 2021;1(3):1–23. https://doi.org/10.1007/s43546-021-00050-z.
[43] Hu Y, Jiang W, Dong H, Majeed MT. Transmission channels between financial
efficiency and renewable energy consumption: does environmental technology
matter in high-polluting economies? J Clean Prod 2022;368:132885.
[44] Islam MS, Hossain ME, Khan MA, Rana MJ, Ema NS, Bekun FV. Heading towards
sustainable environment: exploring the dynamic linkage among selected
macroeconomic variables and ecological footprint using a novel dynamic ARDL
simulations approach. Environ Sci Pollut Res 2022:1–20.
[45] Kao C. Spurious regression and residual-based tests for cointegration in panel data.
J Econ 1999;90(1):1–44. https://doi.org/10.1016/S0304-4076(98)00023-2.
[46] Kuang H, Akmal Z, Li F. Measuring the effects of green technology innovations and
renewable energy investment for reducing carbon emissions in China. Renew
Energy 2022;197:1–10.
[47] Lamarche C. Robust penalised quantile regression estimation for panel data. J Econ
2010;157(2):396–408.
[48] Laverde-Rojas H, Correa JC. Can scientific productivity impact the economic
complexity of countries? Scientometrics 2019;120(1):267–82.
[49] Lee CC, Hussain J, Chen Y. The optimal behavior of renewable energy resources
and government’s energy consumption subsidy design from the perspective of
green technology implementation. Renew Energy 2022;195:670–80.
[50] Lee K, Lee J. National innovation systems, economic complexity, and economic
growth: Country panel analysis using the US patent data. In: Innovation, catch-up
and sustainable development. Springer; 2021. p. 113–51.
[51] Leitão NC, Balsalobre-Lorente D, Cantos-Cantos JM. The impact of renewable
energy and economic complexity on carbon emissions in BRICS countries under the
EKC scheme. Energies 2021;14(16):4908.
[52] Li HS, Geng YC, Shinwari R, Yangjie W, Rjoub H. Does renewable energy electricity
and economic complexity index help to achieve carbon neutrality target of top
exporting countries? J Environ Manage 2021;299:113386. https://doi.org/
10.1016/j.jenvman.2021.113386.
[53] Li W, Chien F, Hsu CC, Zhang Y, Nawaz MA, Iqbal S, et al. Nexus between energy
poverty and energy efficiency: estimating the long-run dynamics. Resourc Policy
2021;72:102063.
[54] Machado JA, Silva JS. Quantiles via moments. J Econ 2019;213(1):145–73.
[55] Mealy P, Farmer JD, Teytelboym A. Interpreting economic complexity. Sci Adv
2019;5(1). eaau1705.
[56] Morshed N, Hossain MR. Causality analysis of the determinants of FDI in
Bangladesh: fresh evidence from VAR, VECM and Granger causality approach. SN
Business Econ 2022;2(7):1–28.
[57] Murshed M, Haseeb M, Alam M. The environmental Kuznets curve hypothesis for
carbon and ecological footprints in South Asia: the role of renewable energy.
GeoJournal 2022;87(3):2345–72.
[58] Nathaniel SP. Economic complexity versus ecological footprint in the era of
globalization: evidence from ASEAN countries. Environ Sci Pollut Res 2021;28(45):
64871–81.
[59] Neagu O, Teodoru MC. The relationship between economic complexity, energy
consumption structure and greenhouse gas emission: heterogeneous panel
evidence from the EU countries. Sustainability 2019;11(2):497.
[60] OEC. ECI Country rankings. 2022. Accessed 08 October, 2022. Available from:
Country Rankings (ECI) | OEC - The Observatory of Economic Complexity.
[61] OECD Forum. Road to recovery: innovation, jobs and clean growth, TUAC
statement to the OECD ministerial council and OECD Forum 2010, Paris, May 26-
28. 2010. p. 2010.
[62] Özbuğday FC, Erbas BC. How effective are energy efficiency and renewable energy
in curbing CO2 emissions in the long run? A heterogeneous panel data analysis.
Energy 2015;82:734–45.
[63] Paramati SR, Shahzad U, Doğan B. The role of environmental technology for
energy demand and energy efficiency: evidence from OECD countries. Renew
Sustain Energy Rev 2022;153:111735. https://doi.org/10.1016/j.
rser.2021.111735.
[64] Pedroni P. Fully modified OLS for heterogeneous cointegrated panels. In:
Nonstationary panels, panel cointegration, and dynamic panels. Emerald Group
Publishing Limited; 2001. https://doi.org/10.1016/S0731-9053(00)15004-2.
M.R. Hossain et al.
[65] Pesaran MH. General diagnostic tests for cross section dependence in panels (IZA
Discussion Paper No. 1240). Institute for the Study of Labor (IZA); 2004. https://
doi.org/10.2139/ssrn.572504.
[66] Pesaran MH. A simple panel unit root test in the presence of cross-section
dependence. J Appl Economet 2007;22(2):265–312. https://doi.org/10.1002/
jae.951.
[67] Pesaran MH, Yamagata T. Testing slope homogeneity in large panels. J Econ 2008;
142(1):50–93. https://doi.org/10.1016/j.jeconom.2007.05.010.
[68] Qadir SA, Al-Motairi H, Tahir F, Al-Fagih L. Incentives and strategies for financing
the renewable energy transition: A review. Energy Rep 2021;7:3590–606. https://
doi.org/10.1016/j.egyr.2021.06.041.
[69] Rafique MZ, Doğan B, Husain S, Huang S, Shahzad U. Role of economic complexity
to induce renewable energy: contextual evidence from G7 and E7 countries. Int J
Green Energy 2021;18(7):745–54.
[70] Saqib N, Duran I, Hashmi NI. Impact of financial deepening, energy consumption
and total natural resource rent on CO2 emission in the GCC countries: evidence
from advanced panel data simulation. Int J Energy Econ Policy 2022;12(2):400–9.
[71] Sepehrdoust H, Tartar M, Gholizadeh A. Economic complexity, scientific
productivity and income inequality in developing economies. Economics of
Transition and Institutional Change; 2021.
[72] Shah IH, Hiles C, Morley B. How do oil prices, macroeconomic factors and policies
affect the market for renewable energy? Appl Energy 2018;215:87–97. https://doi.
org/10.1016/j.apenergy.2018.01.084.
[73] Shahbaz M, Sinha A, Raghutla C, Vo XV. Decomposing scale and technique effects
of financial development and foreign direct investment on renewable energy
consumption. Energy 2022;238:121758. https://doi.org/10.1016/j.
energy.2021.121758.
[74] Shahzad U, Fareed Z, Shahzad F, Shahzad K. Investigating the nexus between
economic complexity, energy consumption and ecological footprint for the United
States: New insights from quantile methods. J Clean Prod 2021;279:123806.
https://doi.org/10.1016/j.jclepro.2020.123806.
[75] Shan S, Genç SY, Kamran HW, Dinca G. Role of green technology innovation and
renewable energy in carbon neutrality: A sustainable investigation from Turkey.
J Environ Manage 2021;294:113004.
[76] Shao X, Zhong Y, Liu W, Li RYM. Modeling the effect of green technology
innovation and renewable energy on carbon neutrality in N-11 countries? Evidence
from advance panel estimations. J Environ Manage 2021;296:113189. https://doi.
org/10.1016/j.jenvman.2021.113189.
[77] Shin Y, Yu B, Greenwood-Nimmo M. Modelling asymmetric cointegration and
dynamic multipliers in a nonlinear ARDL framework. In: Festschrift in honor of
Peter Schmidt. New York, NY: Springer; 2014. p. 281–314.
13
Applied Energy 365 (2024) 123235
[78] Song M, Peng L, Shang Y, Zhao X. Green technology progress and total factor
productivity of resource-based enterprises: A perspective of technical
compensation of environmental regulation. Technol Forecast Soc Change 2022;
174:121276. https://doi.org/10.1016/j.techfore.2021.121276.
[79] Sun Y, Bao Q, Siao-Yun W, ul Islam M, Razzaq A. Renewable energy transition and
environmental sustainability through economic complexity in BRICS countries:
fresh insights from novel Method of Moments Quantile regression. Renew Energy
2022;184:1165–76.
[80] Tabash MI, Mesagan EP, Farooq U. Dynamic linkage between natural resources,
economic complexity, and economic growth: empirical evidence from Africa.
Resourc Policy 2022;78:102865.
[81] Ulucak R, Ozcan B. Relationship between energy consumption and environmental
sustainability in OECD countries: the role of natural resources rents. Resourc Policy
2020;69:101803.
[82] Wang L, Vo XV, Shahbaz M, Ak A. Globalization and carbon emissions: is there any
role of agriculture value-added, financial development, and natural resource rent
in the aftermath of COP21? J Environ Manage 2020;268:110712.
[83] Westerlund J. Testing for error correction in panel data. Oxford Bull Econ Stat
2007;69(6):709–48. https://doi.org/10.1111/j.1468-0084.2007.00477.x.
[84] Yilanci V, Pata UK. Investigating the EKC hypothesis for China: the role of
economic complexity on ecological footprint. Environ Sci Pollut Res 2020;27(26):
32683–94.
[85] Zhang D, Mohsin M, Taghizadeh-Hesary F. Does green finance counteract the
climate change mitigation: asymmetric effect of renewable energy investment and
R&D. Energy Econ 2022;113:106183.
[86] Zhao J, Shahbaz M, Dong K. How does energy poverty eradication promote green
growth in China? The role of technological innovation. Technol Forecast Soc
Change 2022;175:121384. https://doi.org/10.1016/j.techfore.2021.121384.
[87] Kao C, Chiang MH. On the estimation and inference of a cointegrated regression in
panel data. In: Nonstationary panels, panel cointegration, and dynamic panels.
Emerald Group Publishing Limited; 2001. p. 179–222.
[88] Pedroni P. Purchasing power parity tests in cointegrated panels. Review of
Economics and statistics 2001;83(4):727–31.
[89] Pedroni P. Fully modified OLS for heterogeneous cointegrated panels. In:
Nonstationary panels, panel cointegration, and dynamic panels. Emerald Group
Publishing Limited; 2001. p. 93–130.
[90] Lee CC, Chang CP. Tourism development and economic growth: A closer look at
panels. Tourism management 2008;29(1):180–92.