Oil prices as a driving force in the diffusion of renewables?

Abstract

Purpose -Researchers began investigating the diffusion of renewable energy technologies (RETs) in the late 1990s, and, up to today, a variety of authors have presented different approaches to understand the special characteristics of RET diffusion. However, one factor has been thus far disregarded in the research: the influence of raw material prices on RET diffusion. The dependence of a multitude of technologies on raw material prices became especially apparent in recent years due to rather sudden and volatile price movements in raw material markets. Thus, the aim of this work is to contribute to the research by providing evidence for a direct linkage between raw material price developments and RET diffusion. Design/methodology/approach -A theoretical framework used in this article derives from the concept of induced diffusion. This empirical study is based on publicly available data of 18 Organisation for Economic Co-operation and Development (OECD) countries over 20 years and uses multivariate regression analysis to identify the corresponding diffusion models for selected established and emerging RETs. Findings -Results reveal that crude oil prices play a crucial role in the diffusion of emerging RETs. In addition, a joint reflection of induced diffusion and path dependencies as the theoretical foundation of RET diffusion models might be reasonable. Originality/value -This paper makes a significant contribution to the literature on induced diffusion in the field of renewable energies by providing insights from publicly available data from 18 OECD-countries. The findings are highly relevant for managers of the energy industry and policymakers in this field.

Exploring the inflationary effect of oil price in the US

“…Consequently, the response of aggregate CPI to the oil price is basically driven by increases in oil-related commodity prices. Kehrel and Sick (2015) show the prominent joint role of oil prices and raw material prices in the diffusion process of renewable energy technologies. Bai et al (2015) construct IJESM 13,1 China's energy condition index using three Chinese energy data series, namely, China's energy price, consumption and production.…”

The impact of oil prices, financial development and economic growth on renewable energy use

“…The association between oil prices and RE development has been explored by various studies and a significant link between the two has been observed (Shah et al , 2018; Wang et al , 2020; Alkathery and Chaudhuri, 2021; Raggad, 2021; Guo et al , 2021; Hammoudeh et al , 2021; Eder et al , 2018; Reboredo, 2015; Kazemzadeh et al , 2023; Subramaniam et al , 2022; Abdulqadir, 2021; Sick et al , 2013; Kehrel and Sick, 2015). These studies show the existence of a significant link between oil prices and RE, hence the importance of oil prices in influencing RE.…”

The Role of Raw Material Prices in Renewable Energy Diffusion

“…But the impact of prices of raw materials speci cally oil and gas prices on the diffusion of renewable energy technology (RET) is one new viewpoint in this domain. Every part otherwise being equivalent, the prices have been expected to continue unchanging up till now (Kehrel & Sick, 2015).…”

“…Somewhat rapid and unpredictable changes in prices of raw material markets prove the dependency of a large number of technologies on prices of raw material mainly in recent years (Kehrel & Sick, 2015).…”