Determinants of fossil fuel subsidies: Analysis of economic, environmental, and institutional factors using a dynamic panel data approach

Öz

One of the obstacles to sustainable development goals (SDGs) is fossil fuel subsidies (FFS), which have economic, environmental, and social impacts. In addition, it is important to identify the factors that determine FFS. Although FFS have declined in recent years, they remain at high levels. Therefore, the aim of this study is to reveal the effects of three critical variables that shape the economic, environmental, and social impacts of FFS in 45 countries: renewable energy (REN), CO2 emissions (CO2), and government effectiveness (GOV). For this purpose, based on annual data from 2010 to 2022, the relationship between the variables was determined using Driscoll-Kray and Panel-Corrected Standard Errors (PCSE) estimators, along with dynamic panel estimators (system GMM and difference GMM). The findings provide strong evidence that REN, CO2, and GOV reduce FFS, while per capita income increases them. Policy makers can gradually phase out FFS by promoting REN investments and strengthening public governance to achieve SDG targets.

Anahtar Kelimeler

• Fossil fuel subsidies
• Renewable energy
• Government effectiveness
• Dynamic analysis

Kaynakça

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