ICE-TEA 2022, Nevşehir, Turkey, 1 - 04 September 2022, pp.87
This study aims to analyze the persistence characteristics of share of renewables and clean
energy (nuclear and renewables) in primary energy consumption for 5 countries, Austria,
Brazil, New Zealand, Norway and Sweden over the period 1950-2020. The list of countries is
selected based on their high level of primary energy consumption from renewables by 2020.
We consider the importance of true specification of the deterministic components to better
analyze the persistence properties. Changes in regulatory policies, implementation of new
environmental laws, and potential market instabilities arising from some major events might
result in structural breaks in the series. We employ a methodology that accounts for those
breaks. Unlike the existing studies, our study allows for smooth and instant breaks together.
Multiple unknown break dates are estimated by Bai and Perron (2003) methodology and smooth
breaks are introduced in Fractional Fourier Functional Forms. To account for the sign and size
asymmetry of responses of the series, which might arise from the break-even between
adjustment costs and the burden of the shock, we further utilize Quantile Unit Root procedures.
Bootstrap critical values are estimated accounting for the concerns arise from reduced sample
sizes and non- standard distribution of the detrended series. By considering all factors affecting
the stochastic properties of the series, we aim to provide reliable inferences regarding the long
memory property of total and clean energy consumption, which will help policy-makers to
better design and drive their policy objectives. Results show that especially Global Oil Crisis
(1977) and policies towards easing climate change (2000s) had a significant impact on the
countries decisions of energy mix. After accounting for the structural breaks, share of
renewables and clean resources in the primary energy consumption are mostly stationary but
show persistence for the lowest quantiles.