What Determines Investment in Renewable Energy?

Abstract

Investment in renewable energy is an investment in our future. This paper explores the determinants of investment in renewable energy capacity in Europe, the Former Soviet Union, and the Middle East and North Africa. It explores the major challenges each of these regions faces in moving towards a more environmentally friendly generation and use of energy. We find that specific country and regional characteristics, together with the level of pollution of a country, have a significant impact on its total renewable capacity installed. We find mixed evidence that the overall quality of governance promotes renewables.