Evaluating the role of the share and intensity of renewable energy for sustainable development in Germany

Abstract

With its strong ties to the European Union, Germany is well-positioned to assist many countries achieve sustainability goals. Therefore, the main objective of this paper is to examine how renewable energy intensity and renewable energy share improve environmental sustainability, the load capacity factor (LCF) in Germany from 1970 to 2018. To this end, the study uses the autoregressive distributed lag model, with the effects of the Kyoto Protocol included as a dummy variable. The study contributes to the literature by considering and testing for the first time the impact of renewables on the LCF in terms of intensity and share for Germany. The empirical results show that (i) economic growth lowers the LCF faster in the early stages of economic development than in later periods; therefore, the environmental Kuznets curve hypothesis is valid in Germany. (ii) A 1% upsurge in renewable energy intensity has no statistically significant effect on the LCF, while a 1% rise in the share of renewables in the total energy mix increases LCF by 0.48%. (iii) A 1% rise in urbanization reduces the LCF by 6.52%. (iv) A 1% augment in human capital enhances the LCF by 3.49%. These outcomes suggest that the German government should use human capital development and increasing the share of renewable energy as policy instruments to achieve the sustainable development goals.