Does Oil Price plunge affect alternative energy growth? Evidence from Dynamic Panel Model

摘要

The global energy industry is focusing on the challenges posed by the fossil-based energy sources with a view to reducing carbon emissions (Price et al., 2001). This shifts the world’s energy policy toward alternative energy. The result is the formation of the renewable energy technologies such as biofuel, which contributes significantly to the reduction of GHG emissions and the security of the energy supply (Pandey, 2002). In this regard, Wang and Nakata (2009) observe that the high oil price is a key determinant for formulating renewable energy and improving energy efficiency. However, Adeyemi and Hunt (2017) observe that in the past two years, the international oil prices plunged from U.S $114 in June 2014 to just $28 in February 2016, and about $50 in March, 2017. The declining energy prices is promoting renewed interest in the literature that analyses the causes of energy price plunge and its implications on the macro economies of nations and new energy policies. Additionally, the declining oil prices has renewed new interests on its effect on the microeconomic vigour of the renewable energy technological development as well as the challenges and opportunities it poses for energy security and climate change mitigation (Brown et al., 2011). In view of the Intended Nationally Determined Contributions (INDCs) agreement reached during the December 2015 Conference of the Parties in Paris, this paper attempts to shed more light on the matter by determining the correlation between the oil prices and the investments in alternative energy.