Does fiscal decentralization foster renewable electricity generation? A panel data study of OECD countries
As the global community intensifies efforts to transition toward sustainable energy systems, the role of institutional and fiscal arrangements in fostering renewable energy has gained increasing attention. This study aims to assess whether fiscal decentralization contributes to the expansion of rene...
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LLC "CPC "Business Perspectives"
2025-07-01
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| author | Serhiy Lyeonov Oksana Okhrimenko Artem Artyukhov Mariia Saiensus Iuliia Myroshnychenko Yuliia Yehorova Oleksii Havrylenko |
| author_facet | Serhiy Lyeonov Oksana Okhrimenko Artem Artyukhov Mariia Saiensus Iuliia Myroshnychenko Yuliia Yehorova Oleksii Havrylenko |
| author_sort | Serhiy Lyeonov |
| collection | DOAJ |
| description | As the global community intensifies efforts to transition toward sustainable energy systems, the role of institutional and fiscal arrangements in fostering renewable energy has gained increasing attention. This study aims to assess whether fiscal decentralization contributes to the expansion of renewable electricity generation in OECD countries by analyzing panel data and identifying the direction and significance of this relationship. Utilizing a panel dataset of 34 countries spanning 2000–2023, the analysis employs a fixed-effects regression model with Driscoll-Kraay standard errors. It includes a one-year lag of fiscal variables to ensure robustness. The findings reveal a statistically significant but modest negative relationship between the share of subnational revenues in GDP and the share of renewables in electricity generation, suggesting that greater fiscal decentralization may not automatically incentivize renewable energy adoption. More specifically, the fixed-effects model corrected for heteroskedasticity and autocorrelation indicates that the coefficient for lagged subnational revenue (as a percentage of GDP) is negative and marginally significant (p ≈ 0.057), hinting at a potential delayed inhibitory effect. Additionally, country-level fixed effects demonstrate substantial heterogeneity, with nations like Iceland, Norway, and Canada showing systematically higher renewable electricity shares, regardless of fiscal structure. These results underscore the importance of complementary institutional frameworks and national coordination mechanisms to ensure that decentralization effectively supports climate policy goals.
AcknowledgmentThis study was carried out within the framework of a research grant awarded by the Swiss National Science Foundation (grant no. IZURZ1_224119/1) and funded by the European Union grant “NextGenerationEU through the Recovery and Resilience Plan for Slovakia” (No. 09I03-03-V01-00130) and project VEGA – 1/0392/23 “Changes in the approach to the creation of companies’ distribution management concepts influenced by the effects of social and economic crises caused by the global pandemic and increased security risks”. |
| format | Article |
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| institution | Kabale University |
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| language | English |
| publishDate | 2025-07-01 |
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| series | Public and Municipal Finance |
| spelling | doaj-art-5cc8ebbc99aa46d388c72c4d5104703c2025-08-20T03:50:02ZengLLC "CPC "Business Perspectives"Public and Municipal Finance2222-18672222-18752025-07-0114213014510.21511/pmf.14(2).2025.1222498Does fiscal decentralization foster renewable electricity generation? A panel data study of OECD countriesSerhiy Lyeonov0https://orcid.org/0000-0001-5639-3008Oksana Okhrimenko1https://orcid.org/0000-0001-7361-3340Artem Artyukhov2https://orcid.org/0000-0003-1112-6891Mariia Saiensus3https://orcid.org/0000-0002-5961-6454Iuliia Myroshnychenko4https://orcid.org/0000-0002-0463-0347Yuliia Yehorova5https://orcid.org/0000-0002-8756-4073Oleksii Havrylenko6https://orcid.org/0000-0002-7276-550XDoctor of Economics, Professor, Department of Applied Social Sciences, Silesian University of Technology, Poland; Economic Cybernetics Department, Sumy State University, UkraineDoctor of Economics, Professor of the International Economics Department, National Technical University of Ukraine “Igor Sikorsky Kyiv Polytechnic Institute”, Ukraine D.Sc., Associate Professor, Senior Researcher, Research Institute of Trade and Sustainable Business, Bratislava University of Economics and Business, Slovakia; Institute of Public Administration and Business, WSEI University, Poland; Academic and Research Institute of Business, Economics and Management, Department of Marketing, Sumy State University, UkraineDoctor of Economics, Professor, Head of Department of Marketing and International Logistics, Odessa National Economics University, UkrainePh.D., Associate Professor, Department of Economics, Faculty of Business Administration and Economics, Paderborn University, Germany; Oleg Balatskyi Department of Management, Academic and Research Institute of Business, Economics and Management, Sumy State University, UkrainePh.D., Associate Professor, Researcher, Research Institute of Trade and Sustainable Business, Faculty of Commerce, University of Economics in Bratislava, SlovakiaPh.D., Director, Energy Machinery Advanced, UkraineAs the global community intensifies efforts to transition toward sustainable energy systems, the role of institutional and fiscal arrangements in fostering renewable energy has gained increasing attention. This study aims to assess whether fiscal decentralization contributes to the expansion of renewable electricity generation in OECD countries by analyzing panel data and identifying the direction and significance of this relationship. Utilizing a panel dataset of 34 countries spanning 2000–2023, the analysis employs a fixed-effects regression model with Driscoll-Kraay standard errors. It includes a one-year lag of fiscal variables to ensure robustness. The findings reveal a statistically significant but modest negative relationship between the share of subnational revenues in GDP and the share of renewables in electricity generation, suggesting that greater fiscal decentralization may not automatically incentivize renewable energy adoption. More specifically, the fixed-effects model corrected for heteroskedasticity and autocorrelation indicates that the coefficient for lagged subnational revenue (as a percentage of GDP) is negative and marginally significant (p ≈ 0.057), hinting at a potential delayed inhibitory effect. Additionally, country-level fixed effects demonstrate substantial heterogeneity, with nations like Iceland, Norway, and Canada showing systematically higher renewable electricity shares, regardless of fiscal structure. These results underscore the importance of complementary institutional frameworks and national coordination mechanisms to ensure that decentralization effectively supports climate policy goals. AcknowledgmentThis study was carried out within the framework of a research grant awarded by the Swiss National Science Foundation (grant no. IZURZ1_224119/1) and funded by the European Union grant “NextGenerationEU through the Recovery and Resilience Plan for Slovakia” (No. 09I03-03-V01-00130) and project VEGA – 1/0392/23 “Changes in the approach to the creation of companies’ distribution management concepts influenced by the effects of social and economic crises caused by the global pandemic and increased security risks”.https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/22498/PMF_2025_02_Lyeonov.pdfclimate policyelectricity generationfiscal decentralizationOECD countriespanel datarenewable energy |
| spellingShingle | Serhiy Lyeonov Oksana Okhrimenko Artem Artyukhov Mariia Saiensus Iuliia Myroshnychenko Yuliia Yehorova Oleksii Havrylenko Does fiscal decentralization foster renewable electricity generation? A panel data study of OECD countries Public and Municipal Finance climate policy electricity generation fiscal decentralization OECD countries panel data renewable energy |
| title | Does fiscal decentralization foster renewable electricity generation? A panel data study of OECD countries |
| title_full | Does fiscal decentralization foster renewable electricity generation? A panel data study of OECD countries |
| title_fullStr | Does fiscal decentralization foster renewable electricity generation? A panel data study of OECD countries |
| title_full_unstemmed | Does fiscal decentralization foster renewable electricity generation? A panel data study of OECD countries |
| title_short | Does fiscal decentralization foster renewable electricity generation? A panel data study of OECD countries |
| title_sort | does fiscal decentralization foster renewable electricity generation a panel data study of oecd countries |
| topic | climate policy electricity generation fiscal decentralization OECD countries panel data renewable energy |
| url | https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/22498/PMF_2025_02_Lyeonov.pdf |
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