The Impact of Oil Price on Transition toward Renewable Energy Consumption? Evidence from Russia

Abstract

This research investigates the impact of oil price, income and carbon dioxide emissions on renewable energy consumption in Russia for the data period from 1990 to 2015, using the Vector Error Correction Models and the Canonical Cointegrating Regression method. This article is the only study conducting individual time-series analysis that emphasizes the effect of oil price on renewable energy consumption in the case of Russia. The results of empirical analysis conclude that oil price affects renewable energy consumption negatively. The negative oil price effects on renewable energy use can be interpreted as a sign of issue that stems from higher oil prices and slows the transition from conventional to renewable energy sources. Additionally, we found that there is a positive and statistically significant influence of real GDP per capita as a proxy of income on renewable energy consumption, whereas the carbon dioxide emissions have a negative and statistically insignificant influence on renewable energy consumption. Considering these empirical results, Russia, which has a significant share in energy production in the world, should focus on the use of renewable energy in order to maintain this superiority and its sustainability. The findings of this paper may be useful to policymakers and may help to contribute to existing literature for future research in the case of oil-exporting countries.