Energies

energies
Article
Factors of Renewable Energy Consumption in the European
Countries—The Bayesian Averaging Classical
Estimates Approach
Atif Maqbool Khan 1,2 , Jacek Kwiatkowski 3, * , Magdalena Osińska 1 and Marcin Błażejowski 4
1 Department of Economics, Faculty of Economic Sciences and Management, Nicolaus Copernicus University
in Torun, Gagarina 13 A, 87-100 Torun, Poland; [email protected] (A.M.K.); [email protected] (M.O.)
2 University Centre of Excellence IMSErt-Interacting Minds, Societies, Environments, Nicolaus Copernicus
University in Torun, Gagarina 11, 87-100 Torun, Poland
3 Department of Econometrics and Statistics, Faculty of Economic Sciences and Management,
Nicolaus Copernicus University in Torun, Gagarina 13 A, 87-100 Torun, Poland
4 Faculty of Finance and Management, WSB University in Torun, Młodzieżowa 31a, 87-100 Torun, Poland;
[email protected]
* Correspondence: [email protected]
Abstract: The paper aims to identify the most likely factors that determine the demand for energy
consumption from renewable sources (renewable energy consumption—REC) in European countries.
Although in Europe, a high environmental awareness is omnipresent, countries differ in scope and

share of REC due to historical energetic policies and dependencies, investments into renewable and
traditional energetic sectors, R&D development, structural changes required by energetic policy
Citation: Khan, A.M.; Kwiatkowski,
change, and many other factors. The study refers to a set of macroeconomic, institutional, and social
J.; Osińska, M.; Błażejowski, M.
Factors of Renewable Energy
factors affecting energetic renewable policy and REC in selected European countries in two points of
Consumption in the European time: i.e., before and after the Paris Agreement. The Bayesian Average Classical Estimates (BACE) is
Countries—The Bayesian Averaging applied to indicate the most likely factors affecting REC in 2015 and 2018. The comparison of the
Classical Estimates Approach. results reveals that the Gross Domestic Product (GDP) level, nuclear and hydro energy consumption
Energies 2021, 14, 7526. https:// were the determinants significant in both analyzed years. Furthermore, it became clear that in
doi.org/10.3390/en14227526 2015, the REC depended strongly on the energy consumption structure, while in 2018, the foreign
direct investment and trade openness played their role in increasing renewable energy consumption.
Academic Editors: Fernando The direction of changes is gradual and positive. It complies with the Sustainable Development
Morgado-Dias, Michał Bernard
Goals (SDGs).
Pietrzak and Marta Kuc-Czarnecka
Keywords: energy from renewable sources; economic; institutional and social factors; Bayesian
Received: 20 September 2021
Average Classical Estimates (BACE); Paris Agreement
Accepted: 6 November 2021
Published: 11 November 2021
Publisher’s Note: MDPI stays neutral

with regard to jurisdictional claims in
1. Introduction
published maps and institutional affil- Since the last decade of the 20th century, energy from renewable sources (RE) has
iations. received attention across the globe among the different parts of society. The main reason for
this popularity is environmental damage, biodiversity change, land loss, global warming,
rapid increase in population, higher fuel prices, geopolitical and military conflicts, ulti-
mately affecting all other sectors of the economy. Consumption of energy from renewable
Copyright: © 2021 by the authors. sources (renewable energy consumption—REC, hereafter) has climbed by 16.1% in Europe
Licensee MDPI, Basel, Switzerland. and Euro-Asia, 19.9% in Middle Eastern countries, 26.8% in Africa, 27.7% in North America,
This article is an open access article 35.1% in Asia-Pacific, and 50.5% in South and Central America in the last two decades. On
distributed under the terms and the other hand, global use of energy from non-renewable sources climbed by only 1.25%. It
conditions of the Creative Commons indicated small rises in regions such as Africa (2.9%) and the Middle East (3.6%), as well as
Attribution (CC BY) license (https:// negative growth in the European Union (EU), Europe, and Euro-Asian countries (−1.7%,
creativecommons.org/licenses/by/ −0.9%, and −0.6%, respectively) [1].
4.0/).
Energies 2021, 14, 7526. https://doi.org/10.3390/en14227526 https://www.mdpi.com/journal/energies

Energies 2021, 14, 7526 2 of 24
Identifying the REC determinants and understanding which factors drive new energy
sources are critical for policymakers and government authorities. The appropriate selection
of determinants for the REC plays a crucial role in mechanizing suitable policies to find an
efficient alternative solution to tackle the increasing energy demand. Moreover, it helps to
control carbon emissions and further achieve the climate change targets. It also assists them
in shifting their energy demand from fossil fuel to renewable energy to achieve Sustainable
Development Goals in the long run.
The current study examines economic, social, and institutional determinants of re-
newable energy consumption in selected European countries. The energy consumption
structure according to its sources is included in the analysis. All European countries
were taken into account initially, but the data availability limited the selection. Finally,
28 countries were considered, including 25 EU members, Norway, Switzerland, and the
United Kingdom. It is worth mentioning that countries in Europe are fairly diversified
concerning the exploitation of renewable energy sources. Particularly, Central and Eastern
European countries are under-invested in that area. Therefore, the outcomes of this study
are crucial in defining and implementing appropriate energy policies to increase the share
of renewable energy sources in total energy consumption. As a result, this research can
significantly impact policy recommendations and practice in Europe. Finally, this study
contributes to the existing empirical literature by identifying the factors driving renewable
and non-renewable energy demand in European countries.
The methodology is based on the BACE method. The main advantage of the BACE is
to rank the factors according to the probability when the number of potential variables is
fairly large. Furthermore, it ensures comparativeness results and suggests the most likely
model specifications among a vast range of competing ones [2,3]. The current study is
based on an encompassing approach by incorporating the different sets of determinants
of REC.
In this research, we concentrated on the newest data, which seems to be the most
reliable. This is due to the huge increase in the use of energy from renewable sources in
recent years. From the energetic policy perspective, the Paris Agreement prepared in 2015
and signed in 2016 was the milestone to prevent climate change and limit global warming.
What is essential is that 194 countries and the EU ratified the document, which means a
strong interest of different parties in climate resilience. The goals of the Paris Agreement
are strongly related to the low greenhouse gas emissions development, which can be done
by changing the structure of energy production and consumption. Consequently, our
analysis was prepared in two separate years, i.e., 2015 and 2018, conducted separately for
cross-sectional data. The approach considered in the current study is strongly supported by
The Intergovernmental Panel on Climate Change (IPCC) report issued on 9 August 2021
(https://www.ipcc.ch/assessment-report/ar6 accessed on 20 September 2021), which
confirmed the role of humans in climate change affecting many kinds of weather and
climate extremes.
The research questions were whether implementing more restricted policies for envi-
ronment protection and against climate change could help to increase the impact of renew-
able energy sources on total energy consumption, which covers electricity, heating/cooling,
and transportation. The answer to such a question is provided using descriptive statistical
analysis with the coefficient of variation and a more advanced BACE approach.
The novelty of the current research lies in a direct comparison of the renewable energy
consumption factors in two years and finding the incentives for the REC in the European
countries. Furthermore, a few causal models useful for implementing appropriate energy
policy in terms of energy usage patterns are suggested. As a result, this research can
significantly impact policy recommendations and practice in the European countries,
taking into account their current development and the scale of REC. Finally, this study
adds to the existing empirical literature by identifying the factors driving renewable energy
demand in Europe. To the best of our knowledge, no empirical research incorporates and
investigates a large set of REC determinants using the BACE approach at the regional level.
Energies 2021, 14, 7526 3 of 24
The rest of the paper is organized as follows. Section 2 reports the relevant literature
review. Section 3 provides materials and methods. Section 4 presents the empirical results
and checks their robustness. Section 5 provides a discussion of the results, conclusions,
and future research plans.
2. Literature Review
In the literature, several studies analyzed the relationship between economic growth
and deployment of renewables [4–7], and there is some agreement on how they interact.
It seems evident that the factors such as GDP or GDP per capita reflect the country’s
wealth and play a considerable effect in deciding the use of renewables. Moreover, a
surplus revenue implies a greater possibility for RE growth or more resources to support
it. Increased income allows countries to cover developing RE technologies while also
supporting the costs of government policies promoting and regulating RE. Several studies
have focused on the determinants of REC in the economic literature [8–10].
According to a study [11], RE technologies are relatively expensive and cannot compete
with traditional energy technologies without government support. Several studies [12–14]
emphasized how public policies are one of the primary motivators of RE growth in this
context. Subsidies, quota rules, direct investment, research and development (R&D), feed-
in tariffs, and green certificates are some of the most frequent public policy initiatives to
boost renewables. Ref. [15] investigated the relationship between RE, terrorism, fossil fuels,
commerce, and economic growth for France. Their findings suggested that trade openness
and REC are linked in both directions (bidirectional causality).
Some authors (e.g., [11,12,16,17]) explicitly consider the effects of political factors on
REC. On the other hand, other studies focus exclusively on the factors that influence RE
use without separating the impact of various policy instruments [5,18–21]. Political, socioe-
conomic, and country-specific issues are all included in the models of these studies [11,16].
Most studies have revealed that real income is one of the key drivers of REC [5,18,21,22].
Furthermore, because high-income countries can readily fund costly RE investments and
give incentives due to abundant sources, countries may use more renewables as their GDP
rises [11,16,17].
Some studies found that carbon emissions increase REC [5,11,18–22]; others found that
carbon emissions negatively impact [11,12,17]. Concerns about the environment, particularly
global warming, are highlighted as key factors in reducing fossil fuel consumption and
increasing REC [5,11,21,22]. As the main cause of global warming and climate change is
the release of large amounts of greenhouse gases into the atmosphere [16], emissions are
used in models to account for environmental concerns. Increases in emissions may be
associated with increased use of renewables to meet emissions targets set by international
agreements [17,19,20]. Other important factors influencing REC include energy prices, which
have been found to have statistically significant effects in some studies [5,17,18,20–22]. Other
energy sources, particularly fossil fuels, might be considered alternatives for renewables.
As fossil fuel prices rise, it will increase the consumption of RE [5,16–18,20–23].
Furthermore, because there is a close relationship between energy prices and inflation,
and inflation and economic growth, the use of RE can reduce the cost-push inflationary
pressures caused by price increases in fossil fuels and the risk of stagflation, according
to [20]. Furthermore, other studies [12,17] stressed the importance of policy consistency
and clarity for RE investments. The relevance of institutions, such as EU membership,
is highlighted by [16]. Common targets and EU energy policy may boost renewable
deployment in the case of EU membership.
According to Ref. [11], if a country has serious energy security issues, it may be com-
pelled to rely extensively on fossil fuels, lowering its RE share. Changes in energy consump-
tion, especially electricity consumption, may negatively or positively impact REC [11,12,16].
Previous research has found that trade openness [21], international trade [22], and economic
growth [24] have statistically significant and positive effects on REC.
Energies 2021, 14, 7526 4 of 24
In recent debates around the world, the importance of RE in economic development

and its environmental benefits in climate risk management has piqued interest. Increasing
RE production and consumption investment could be more cost-effective and practical
than using non-renewable energy [25,26]. According to Ref. [27], RE can be a crucial tool in
climate change adaptation and mitigation. It is commonly known that CO2 emissions from
RE sources are lower than those from traditional energy sources.
In Ref. [5], there was discovered that in the G7 countries, higher real GDP per capita
leads to higher REC per capita. While CO2 emissions have a positive effect, increasing
oil prices has a smaller but negative impact. In another study, authors discovered a
similar beneficial influence of real GDP per capita on REC per capita for 18 emerging
economies [24]. Ref. [21] found the same effect of real GDP per capita on REC per capita
for a panel of 64 countries. The study also discovered that trade openness influences REC
per capita.
From 1995 to 2011, Ref. [28] utilized a panel data model to investigate the determinants
of RE investment in the EU-27 in solar and wind scenarios. Their findings imply that a
robust regulatory perception negatively impacts solar energy investment, with decreased
sunshine hours catalyzing increased investment in wind energy in the EU-27. Between
1990 and 2014, Ref. [29] investigated the impact of macroeconomic and social variables on
RE usage in the G7 countries. The study shows that research spending (as a percentage of
GDP), the human development index, and energy imports positively impact RE use.
Between 2003 and 2014, Ref. [30] investigated if RE stimulates economic growth in
(EU-28) countries. The findings show that RE (biomass, hydropower, geothermal, wind,
and solar) contributes favorably to energy growth in EU-28 countries, with biomass having
the most significant impact. There is also a unidirectional causal relationship between
sustainable energy growth and primary RE output in the medium and long run. It was
claimed that a 1% increase in primary RE output results in a 0.05 to 0.06 percent rise in
GDP per capita.
The study [31] analyzed the determinants for 53 countries by using the WDI data set
from 1990–2017. The study used the variables (e.g., REC (hydroelectricity terawatt-hour)
and non-renewable energy consumption (daily consumption of barrels of oil) as dependent
variables and human capital (average years of schooling population), and non-renewable
energy price (barrel price of oil constant 2016 USD) as independent variables. The selection
of this study is consistent with the previous studies (e.g., [32–35]). The study found a
positive and statistically significant relationship between the non-renewable energy price
and the two types of energy consumption.
Similarly, Ref. [36] examined variables relating to RE production and the financial
sector using panel data for 119 non- Organisation for Economic Co-operation and Develop-
ment (OECD) countries. The study discovered that the Kyoto Protocol and commercial
banking have a positive effect on RE. On the other hand, Ref. [37] examined the RE capac-
ity, global knowledge stock, GDP per capita, electricity consumption growth rate, Kyoto
Protocol, and alternative energy source production in 26 OECD countries. The study
discovered that while ratification of the Kyoto Protocol and the deployment of nuclear
and hydroelectric energy technologies improves RE, energy security, fossil fuel production,
future electricity demand, and national RE policies have no effect. In conclusion, the
relationship between different variables (e.g., economic growth, carbon emissions, and
RE generation) is not consistent across nations or estimating methods, as evidenced by
the above review. Table 1 includes a summary of previous studies on determinants of
renewable energy consumption.
Energies 2021, 14, 7526 5 of 24
Table 1. Summary of previous studies on determinants of renewable energy consumption.
S. No. Reference No. Sample Country(s) Target Variable(s) Methodology Empirical Findings
22 OECD
1 [4] 1985–2005 Y, REC, GCF, LF Granger causality REC ←→ Y
countries
Increases in real GDPpc and CO2 pc are proven to be
important drivers of RECpc usage in the LR. These findings
2 [5] 1980–2005 G7 countries REC, Y, P, CO2 , OP Panel Cointegration hold true when using two alternative Panel Cointegration
estimators. OP has a smaller, but nevertheless negative
impact on the REC.
REC, CO2 , GDPpc, Pg, Enuse, OP, CP, [+,S] effect of CO2 , [−] effect of Fiscal, Financial, and
FEVD,
3 [11] 1990–2010 38 countries NGP, Deregulations, Kyoto, EI, EPOS, Voluntary policy measures, Enuse, [NS] effect of EI, energy
PCSE Estimator
EPCS, EPNGS, EPNS, ERI prices, GDPpc, Pg, and deregulation on REC.
Policies promoting renewables, ECpc affect [+,S] to
23 EU REC, CO2 pc, CRES, ECpc, IDE, IGEG,
4 [12] 1990–2007 PCSE Estimator renewable energy share. [−,NS] effects of EI, lobby,
countries ICEG, INEG
and CO2 pc.
All variables and REC have LR bidirectional causalities and
5 [15] 1980–2015 France REC, T, fossil EC, EG, TO, GDPpc ARDL, GC
SR unidirectional causalities.
[−,NS] lobby effect, [−] effect of CO2 pc, and [+] effect of
CRES, CO2 pc, ECpc, IDE, IGEG, ICEG,
24 European Enuse per capita.
6 [16] 1990–2006 INEG, SURF, CP, NGP, OP, EU’s OLS, RE, FE, FEVD
countries The effects of income, fossil fuel prices, and EI were found
member in 2001, Y
to be [NS].
FE, (difference and system GMM), (Coal, oil, gas, and nuclear) the energy source is [S] and
24 European CRES, CO2 pc, ECpc, IDE, ICEG,
7 [17] 1990–2006 Least Squares Dummy Variable consistent effect.
countries IOEG, IGEG, INEG, Y, OP, NGP, CP
Corrected (LSDVC) Per capita energy effect on RE use is [+,S].
In LR and SR [+,S] effects of GDPpc, CO2 pc, and OP on
25 OECD
8 [18] 1980–2011 RECpc, GDPpc, CO2 pc, OP PECM RECpc. All variables have bidirectional causalities in LR
countries
and SR.
OECD contribution of RE to energy supply, Panel Threshold Energy prices have [+,S] effect in a high growth regime,
9 [20] 1997–2006
countries GDP, CPI for energy Regression model whereas in a low growth regime, [−,NS] effects are found.
CO2 pc growth and GDPpc growth had [S] effects on RECpc
Pooled OLS, FE, R, Dynamic growth for all subsamples (HIC, MIC, LIC, and all
10 [21] 1990–2011 64 countries REC, CO2 , OP, GDPpc, TO
(difference and system GMM) countries). Except in HIC, TO also raises REC. For the
entire sample of countries, OP growth has a [+,S] effect.
Energies 2021, 14, 7526 6 of 24
Table 1. Cont.
CO2 pc growth was observed to cause an increase in REC
growth. For MIC and LIC, and the entire sample, the results
11 [22] 1990–2011 64 countries REC, CO2 pc, OP, GDPpc, TO Dynamic system-GMM panel model revealed a [+,S] effect of TO. HIC and MIC were found to
have a positive impact on GDPpc growth. The OP growth
had a negative impact in MIC and the entire sample.
18 Emerging
12 [24] 1994–2003 REC, NREC, HC, OP PECM Real GDPpc → RECpc
economics
Generalized Least Squares (GLS), HC has an [S] effect on REC at the global level, in MIC, HIC,
13 [31] 1990–2017 53 countries REC, NREC, HC, OP
FMOLS and LMIC. On NREC and REC, OP has a [+,NS] impact.
AE, GDP, GDPpc, FDI, Enuse, EI, The coefficients on AE, CPI, UP, Enuse, and EI are [S]
EPNS, EPCS, EPNGS, EPOS, EPRS, Linear model (FE), nonlinear model effects for both regimes with the same signs. GDPpc, EPNS,
14 [38] 1990–2012 58 countries
CPI, trade, REC, UP, GHGs, LF, CR, (Panel Threshold Regression) trade, OR, and ASED. [S] effects on the REC in both
OR, NGR, GCF, TP, REO, ASED regimes with varied signs and sizes.
72 countries 1% increase in GDP or GDPpc leads to an increase in RE
REP, REPpc, REC, RECpc,
(24 developed between 0.05% and 1.01%, and a 1% increase in energy
15 [39] 1980–2014 SREP, SREC, REPpc, SRECpc, EG Panel unit root tests, OLS
and price causes an increase in RE between 0.07% and 0.99%
(as GDP, GDPpc), CO2 , CO2 pc, OP
48 developing) concerning various proxies.
20 Latin RE capacity, CPR, GPR, CO2 pc, [+,S] effects of feed-in tariffs, portfolio standard, auctions,
Quarterly data American and GDPpc, energy dependence, auctions, CPR per capita, GDP per capita, [+,NS] effects of fiscal
16 [40] FE, RE, PCSE models
from 1984–2004 30 European portfolio standard, feed-in tariffs, incentive, [−,S] effects of electricity demand
countries fiscal incentives growth, CO2 pc.
LR : REC ←→ Y
17 [41] 1990–2007 80 countries REC, NREC, LF, GCF, Y PECM
SR : REC ←→ Y
France, Italy, Canada, and U.S.A. : REC 6= Y
18 [42] 1980–2009 G7 countries REC, LF, GCF, Y, NREC Hatemi-J causality tests England and Japan : REC ←→ Y
Germany : Y ←→ REC
Energies 2021, 14, 7526 7 of 24
Table 1. Cont.
79% of the countries : REC ←→ Y
19 [43] 1980–2009 108 countries GDP, ELC used as a proxy of REC FMOLS 19% of the countries : REC 6= Y
2% of the countries : Y → REC
[−,S] effects of TO, FDI, policy support programs, growth
108 developing GDP, FEDI, Kyoto, CPR, GPR, TO,
20 [44] 1985–2005 Two-step selection models of ELC, and production from fossil fuels. FD and Kyoto
countries hydro share, RE policy, FD
Protocol was [NS] effects.
Abbreviations of Variables: Access to electricity (% of population) (AE); Adjusted savings: energy depletion (current USD) (ASED); Carbon dioxide emissions (CO2 ); Carbon dioxide emission per capita (CO2 pc);
Consumer price index (2010 = 100) (CPI); Coal rents (CR); Coal production (CPR); Coal price (CP); Contribution of Renewables to total Energy Supply (CRES); Energy consumption (EC); Economic growth (EG);
Energy imports (EI); Energy use (Enuse); Electricity consumption (ELC); Electricity production from coal sources (% of total) (EPCS); Electricity production from natural gas sources (% of total) (EPNGS);
Electricity production from oil sources (% of total) (EPOS); Electricity rates for industry (ERI); Electricity production from renewable sources, excluding hydroelectric (% of total) (EPRS); Electricity production
from nuclear sources (% of the total) (EPNS); Financial development (FD); Foreign direct investment (FDI); Gross Domestic Product (GDP); GDP per capita (GDPpc); Gas production (GPR); Greenhouse gases
(GHGs); Gross capital formation (GCF); Human capital (HC); Income production (IP); Import dependency of energy (%) (IDE); Importance of gas to electricity generation (%) (IGEG); Importance of oil to
electricity generation (%) (IOEG); Importance of coal to electricity generation (%) (ICEG); Importance of nuclear to electricity generation (%) (INEG); Labor force (LF); Natural gas rents (NGR); Non-renewable
energy consumption (NREC); Natural gas price (NGP); Oil price (OP); Oil rents (OR); Population growth (Pg); Per capita energy consumption (ECpc); Per capita renewable energy consumption (RECpc); Per
capita renewable energy production (REPpc); Real GDP (Y); Renewable electricity output (% of total electricity output) (REO); Renewable energy (RE); Renewable energy production (REP); Renewable energy
consumption (REC); Share of RE production in total energy production (SREP); Share of RE consumption in total energy consumption (SREC); Share of per capita RE production in per capita total energy
production (SREPpc); Share of per capita RE consumption in per capita total energy consumption (SRECpc); Surface area (SURF); Terrorism (T); Total population (P); Trade openness (TO); Urban population
(UP). Abbreviations of Methods: Fixed Effects Vector Decomposition (FEVD); Fixed Effect (FE); Fully Modified Ordinary Least Squares (FMOLS); Ordinary Least Squares (OLS); Panel Corrected Standards
Energies 2021, 14, x FOR PEER REVIEW 8 of 24
Error (PCSE); Panel Error Correction Model (PECM); Random Effect (RE). Abbreviations of Results: Positive and significant results: [+,S]; Negative and significant results: [−,S]; Negative and insignificant
results: [−,NS]; [Positive and insignificant results: [+,NS]); REC Y indicates a bidirectional causality between REC and EG; Y→REC indicates a unidirectional causality from EG to REC; REC→Y indicates a
↔
unidirectional causality from REC to EG; Neutral indicates no causal relationship; Long-run (LR); Short-run (SR); Low-income countries (LIC); Low-middle-income countries (LMIC); Middle-income countries
3. Materials and Methods
3.1. Data Sources and Descriptive Statistics
(MIC); High-income countries (HIC). The current study uses cross-sectional data on the REC and its determinants in
selected European countries in 2015 and 2018. The years 2015 and 2018 were selected for
two reasons. Firstly, analysis for the years earlier than 2014 (such as 2007) gave no
economically reasonable results. The explanation comes from the fact that in Europe, some
countries are very advanced in consuming energy from renewable sources. Still, there
exists a number of countries that are rather underdeveloped in that area. A significant
group of countries entered the European Union only in 2004 (ten countries), 2007 (Bulgaria
and Romania), and 2013 (Croatia). These years can be treated as structural breaks in the
countries’ economic and energetic policies, particularly from the post-Soviet Bloc.
Furthermore, the financial crisis and post coming recession harmed these countries by
limiting investment in the newest energetic technologies. It seems that after the Paris
Agreement and stronger policy on CO2 emissions, the state of the art has begun to change.
Secondly, the data for 2018 was complete for almost all European countries. Newer data
were incomplete, and starting from 2020 may be affected by the COVID-19 pandemic and
other structural breaks such as the US presidential election. In this study, we tried to avoid
the impact of new structural breaks, which creates new areas of analysis.
The further explanation comes directly from the Eurostat data. It shows that the
target for the overall share of energy consumption from renewable sources for the EU in
2020 is 20%. In 2018, this share equaled 18.01%. The overall energy consumption
comprises electricity, heating and cooling, and transport. Figure 1 compares the actual
shares of overall energy consumption in 2015, 2018, and 2020 target values in EU27 and
individual countries. Similar to Iceland and Norway, leading countries exceeded as much
as three times the European target value for overall energy consumption from renewable
sources. In contrast, Finland, Sweden, and Latvia exceeded twice as much. However, there
are substantial differences between 2015 and 2018. In general, the share achieved in 2018
is higher than in 2015. There are also some cases that indicate the opposite direction,
although it can result from local policies and investments. The increase in the share of
energy consumption from renewable sources can be perceived as gradual, caused by
growing awareness of adverse global warming effects, but the determinants that influence
that rise change over time and should be identified.
Share of energy from renewable sources

90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
2015 overall energy 2018 overall energy 2020 overall target

Energies 2021, 14, 7526 8 of 24

The current study uses cross-sectional data on the REC and its determinants in se-
lected The current study
European uses cross-sectional
countries in 2015 and 2018. dataTheon the REC
years andand
2015 its determinants in selected
2018 were selected for
European countries in 2015 and 2018. The years 2015 and 2018 were selected for two
two reasons. Firstly, analysis for the years earlier than 2014 (such as 2007) gave no eco-
reasons. Firstly, analysis for the years earlier than 2014 (such as 2007) gave no economically
nomically reasonable results. The explanation comes from the fact that in Europe, some
reasonable results. The explanation comes from the fact that in Europe, some countries are
countries are very advanced in consuming energy from renewable sources. Still, there ex-
very advanced in consuming energy from renewable sources. Still, there exists a number
ists a number of countries that are rather underdeveloped in that area. A significant group
of countries that are rather underdeveloped in that area. A significant group of countries
of countries entered the European Union only in 2004 (ten countries), 2007 (Bulgaria and
entered the European Union only in 2004 (ten countries), 2007 (Bulgaria and Romania), and
Romania), and 2013 (Croatia). These years can be treated as structural breaks in the coun-
2013 (Croatia). These years can be treated as structural breaks in the countries’ economic
tries’ economic and energetic policies, particularly from the post-Soviet Bloc. Further-
and energetic policies, particularly from the post-Soviet Bloc. Furthermore, the financial
more, the financial crisis and post coming recession harmed these countries by limiting
crisis and post coming recession harmed these countries by limiting investment in the
investment in the newest energetic technologies. It seems that after the Paris Agreement
newest energetic technologies. It seems that after the Paris Agreement and stronger policy
and stronger policy on CO2 emissions, the state of the art has begun to change. Secondly,
on CO2 emissions, the state of the art has begun to change. Secondly, the data for 2018 was
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as three
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times the European target value for overall energy consumption from renewable sources.from renewable sources. In
contrast, Finland, Sweden, and Latvia exceeded twice as much.
In contrast, Finland, Sweden, and Latvia exceeded twice as much. However, there are However, there are sub-
stantial differences
substantial differences between
between20152015
and 2018. In general,
and 2018. the share
In general, achieved
the share in 2018inis2018
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2015. There aresome casescases
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indicate opposite
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increasein the in share of energy
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sumption fromfrom
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Share of energy from renewable sources

90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
2015 overall energy 2018 overall energy 2020 overall target
Figure 1. Overall energy consumption from renewable sources in Europe in 2015, 2018, and 2020
Figure 1. Overall energy consumption from renewable sources in Europe in 2015, 2018, and 2020
(target value). Source: Based on https://ec.europa.eu/eurostat/web/energy/data/shares (accessed
(target value). Source: Based on https://ec.europa.eu/eurostat/web/energy/data/shares (accessed on
on 25 October 2021).
25 October 2021).
As the situation is dynamically developing, the study answers the question of if
there is any difference in the number and strength of factors determining REC in selected
European countries in 2015 and 2018.
Energies 2021, 14, 7526 9 of 24
The study is based on secondary data sources, including World Development Indi-
cators (WDI-2019); Statistical Review of World Energy (BP-2019); International Monetary
Fund (IMF); Energy Information Administration (EIA); Worldwide Governance Indicators
(WGI); International Renewable Energy Agency (IRENA), and the International Energy
Agency (IEA) consisting of annual observations on selected European countries. The list of
countries used in the study, due to the data accessibility, is given in Table 2.
Table 2. The list of selected countries.
Countries Codes Countries Codes Countries Codes Countries Codes

Austria AUT Finland FIN Latvia LVA Romania ROU
Belgium BEL France FRA Lithuania LTU Slovak Republic SVK
Croatia HRV Germany DEU Luxembourg LUX Slovenia SVN
Cyprus CYP Greece GRC Netherlands NLD Spain ESP
Czech
CZE Hungary HUN Norway NOR Sweden SWE
Republic
Denmark DNK Ireland IRL Poland POL Switzerland CHE
Estonia EST Italy ITA Portugal PRT United Kingdom GBR
Taking into account the literature review, many economic, institutional, and energy
variables were specified as potential determinants of REC. They can be divided into the
following subgroups, while symbols used in the study are given in parentheses:
(1) Economic: Gross Domestic Product (GDP), FDI net inflow (FDI_BOP), unemployment
(UNEMP), trade openness (TO).
(2) Disaggregate energy consumption from the following sources: oil (OC), coal (CC),
gas (GC), nuclear (NC), and hydro (HC).
(3) Social: Education index (EI), Life expectancy index (LEI), School enrollment, tertiary
(% gross) (SET).
(4) Institutional: political stability absence and absence of violation (PSA), control of
corruption (CCUR), the rule of law (RL).
(5) Demographic: Surface area (SURF).
(6) Dummies: Top developed countries’ group of world’s advanced economies and
wealthiest liberal democracies, and G7 countries (TDC), and former members of the
Eastern Bloc countries (FEBC).
A remarkable disparity between highly developed European and developing economies
justifies a dummy variable corresponding to the division in (6). The selection of variables
is based on both the environmental economics fundamentals [45] and empirical literature
review. The selected variables, GDP, oil price, and oil consumption, were used by [22]; For-
eign direct investment, net inflows (% of GDP) by [34]; Rule of law, Control of corruption,
Political stability and Absence of violence/terrorism by [46]; Education index by [47]. The
description of all variables and their units is given in Table A1 in Appendix A.
Table A2 presents descriptive statistics for the population of selected European coun-
tries in the years 1995, 2000, 2005, 2010, 2015, and 2018. It confirms the general change in the
structure of the energy consumption from different sources. On average, the consumption
of oil, gas, nuclear, and, particularly coal, in Europe decreases gradually while hydro and
renewable energy use increases substantially. The most substantial reduction is observed
in coal energy consumption, which amounts to almost 39% between 1995 and 2018. On
the other hand, the increase in renewable energy consumption was over 2200% from the
average 0.2409 in 1995 to 5.7405 in 2018. Values of standard deviation (SD) show that
dispersion is quite huge, and coefficients of variation exceed 100 percent. In Figure A1, the
coefficients of variation for energy consumption from different sources are shown. They
inform about the general tendency towards convergence among the countries in energy
consumption [48]. The convergence is observed for oil and gas energy consumption. The
remaining energy sources reveal rather a divergence, which confirms huge variability
among the countries. The empirical distributions are positively skewed and leptokurtic.
Energies 2021, 14, 7526 10 of 24
3.2. Methodology
One potential problem in the linear model selection procedure is finding a significant
set of explanatory variables among all potential determinants. The problem is not trivial if
we imagine that, for the sake of this analysis, we have 18 potential variables with 262,144
linear combinations; some of them are equally likely with similar explanatory power.
To overcome this problem, we decided to use BACE—Bayesian Averaging of Classical
Estimates introduced in [2], which is essential for the credibility and conclusiveness of
presented results. Briefly speaking, BACE parameter estimates are obtained by applying
Ordinary Least Squares (OLS) and then averaged across all possible combinations of mod-
els, given their explanatory power. Therefore, we do not only make inferences on the “best”
single model, but we take into account the uncertainty of all models. Consequently, we can
easily identify significant determinants of a dependent variable based on a whole model
space without specific knowledge [3]. The latest review of model averaging techniques
and their implementation is presented in [49].
The construction of the BACE model methodology is explained by Equations (1)–(6).
Let us consider the following linear regression model for a cross-sectional dataset:
M j : y = αι N + X j β j + e, j = 1, . . . , 2K (1)
where K denotes the total number of potential explanatory variables, 2k is a total number
of possible linear combinations, ı N is a ( N × 1) vector of ones,
y is a vector of observations
(in our case, renewable consumption index), X j is N × k j matrix containing the set of
regressors included in the model M j , k j is number of regressors included in the model
M j , β j is k j × 1 vector of unknown parameters, and e is ( N × 1) vector of errors, nor-
mally distributed, e ∼ N 0 N , σ2 IN . Notation N (µ, Σ) denotes a normal distribution with

location µ and covariance Σ.

Based on Ref. [2], we can use OLS estimates to calculate the approximation of the
posterior probability of every model M j S using the following formula:
kj
− N2
Pr( M j ) N − 2 SSEj
Pr( M j | y) ≈ (2)
K ki − N2
Σ2i=1 Pr( Mi ) N − 2 SSEi
where SSS j and SSS j are the OLS sum of squared errors, k j and k is are the number of
regression parameters β j and β i , Pr M j , and Pr ( Mi ) are prior probabilities of models M j
and Mi .
In our case, we use the popular binomial model prior [50]:
Pr M j = θ ki (1 − θ )K −ki , θ ∈ [0, 1]

(3)
We know that we only need to specify a prior expected model size E(Ξ) = Kθ to
set the prior probability for all competitive models from binomial distribution properties.
For example, if θ = 0.5, then the prior expected model size equals the average number of
potential regressors, and all models have an equal prior probability.
In the BACE approach, we can also obtain the averages of parameter estimates β based
on the whole model space [2,51]:
2K
E( β | y) ≈ ∑ Pr( Mi y) β̂ i (4)
i =1
2K 2K
2
Var( β | y) ≈ ∑ Pr( Mi | y)Var( βi ) + ∑ Pr( Mi |y) ( β̂i − E( β y)) (5)
i =1 i =1
where β̂ i and Var ( β i ) are the OLS estimates of β i from model Mi .

Energies 2021, 14, 7526 11 of 24
Another useful and popular characteristic in model averaging is so-called posterior

inclusion probability (PIP), which is defined as the posterior probability that the indepen-
dent variable xi is relevant in explaining the dependent variable [38,52]. In our case, the
PIP is calculated as the sum of the posterior model probabilities for all of the models that
include a specific variable:
2K
Pr( β i 6= 0 | y) = ∑ Pr( Mr | βi 6= 0 , y) (6)
i =1
Thus, PIP can be understood as the importance of each variable for explaining the
dependent variable.
4. Results
4.1. Empirical Results
The study takes into account a group of independent variables that represent potential
factors responsible for renewable energy consumption (REC) in 28 European economies.
The variables and their symbols are presented in Section 3.1 and Table A1. Referring to the
environmental policy adopted in Europe after the Paris Agreement in 2015, we considered
two points of time:
(a) the year 2015, just before the Paris Agreement ratification;
(b) the year 2018, after the Paris Agreement ratification.
It should be mentioned that the EU and all its members individually ratified the Paris
Agreement in 2016.
The research question was whether implementing a more restricted policy for envi-
ronment protection and against climate change could cause a substantial change in the
determinants of REC in European countries.
In order to identify determinants of REC, we used the BACE selection procedure,
which enables searching all possible combinations of potential variables and selecting
the most probable candidates. The BACE also enables calculations of the averages of the
coefficient means and standard deviations of parameters, and the explanatory power of
competitive models. We used the BACE 1.1 package (the BACE 1.1 package is available at
http://ricardo.ecn.wfu.edu/gretl/cgi-bin/gretldata.cgi?opt=SHOW_FUNCS (accessed on
1 August 2021) and was developed by [53]), which is available in the gretl program as open-
source software. Gretl is free program and it may be redistributed and/or modified under
the terms of the GNU General Public License (GPL) as published by the Free Software
Foundation, originally developed in North Carolina, USA and and Ancona, Italy.
The whole model space in the regression model (excluding intercept) was equal to
218 = 262, 144. The total number of Monte Carlo iterations was 1,000,000 (including
10% burn-in draws). The correlation coefficient between the analytical and numerical
probabilities of the top models was above 0.99, which means that convergence of simulation
was confirmed. Model prior was set to uniform, which means that all possible specifications
were equally likely.
The posterior results are given in Table 3. It shows posterior inclusion probabilities,
the average value of the coefficient (parameter estimate overall considered models), and the
corresponding average standard error. The posterior inclusion probability (PIP) equalled
at least 0.7, and shows a high probability of being included in the model. Although there is
no formal requirement for high posterior probability, it is reasonable to assume that it is at
least higher than 0.5 and treats the results higher than 0.7 as reliable.
Energies 2021, 14, 7526 12 of 24
Table 3. Posterior estimates of renewable consumption determinants in 2015 and 2018.
2015 2018
Variable Avg. Avg. Std. Avg. Avg. Std.
PIP PIP
Coefficient Error Coefficient Error
Const 1.0000 10.9202 15.5713 1.0000 6.3989 14.5596
NC 1.0000 −0.3141 0.0634 0.9992 −0.2503 0.0767
GDP 0.8834 0.0099 0.0056 0.9808 0.0119 0.0042
FDI_BOP 0.3705 −0.0028 0.0055 0.9186 0.0184 0.0088
TO 0.4940 −0.0077 0.0110 0.8550 −0.0203 0.0126
HC 0.7368 −0.1845 0.1607 0.7770 −0.1481 0.1294
GC 0.9933 −0.5105 0.1646 0.4701 −0.1247 0.2003
OC 0.9196 0.2859 0.1728 0.4443 0.0673 0.1206
CC 0.2480 0.0058 0.0305 0.4036 0.0258 0.0452
TDC 0.5894 7.1765 9.1039 0.3741 −0.5901 6.9248
SURF 0.6361 0.000006 0.000006 0.3274 0.000001 0.000004
SET 0.3528 −0.0108 0.0224 0.3048 0.0082 0.0208
PSA 0.1980 0.0586 0.8835 0.2994 0.6116 1.5392
LEI 0.4445 −10.1697 16.4292 0.2966 −5.8818 15.5512
FEBC 0.3009 −0.0741 1.4099 0.2430 −0.2563 1.0624
UNEMP 0.3690 −0.0628 0.1405 0.2291 0.0091 0.1133
CCUR 0.4248 −0.9699 1.8046 0.2136 −0.1381 0.8091
RL 0.2933 0.4730 1.7139 0.2083 0.1680 1.0496
EI 0.2326 0.4600 7.8276 0.1901 0.0202 5.8023
Note: Bold font indicates PIP values greater than 0.7. Abbreviations of Variables: (NC) Nuclear consumption;
(GDP) Gross Domestic Product; (FDI_BOP) FDI net inflow; (TO) Trade openness; (HC) Hydro consumption;
(GC) Gas consumption; (OC) Oil consumption; (CC) Coal consumption; (TDC) Top developed countries; (SURF)
Surface area; (SET) School enrollment, tertiary; (PSA) Political stability absence; (LEI) Life expectancy index;
(FEBC) Former members of the Eastern Bloc countries; (UNEMP) Unemployment; (CCUR) Control of corruption;
(RL) The Rule of law; (EI) Education index.
The results in Table 3 exhibited a substantial difference between factors of REC in

European countries in 2015 and 2018. The results for 2015 indicated nuclear and hydro
energy consumption, oil and gas energy consumption, and the value of GDP. The signs of
parameters for NC, HC, and GS were negative, which means that there was a competition
between specified energy sources in Europe depending on hitherto resources, infrastructure,
and long-term contracts. The GDP denotes the country’s economic position and readiness
for renewable infrastructure investments. The average coefficient of 0.0099 shows that
increasing GDP by USD 1000 will increase renewable energy consumption by 11.9 Mtoe,
keeping all other factors unchanged.
The results for the year 2018 revealed that the following factors are the most likely:
nuclear and hydro energy consumption, GDP, FDI net inflow, and trade openness. What is
more interesting is that the signs of the mean parameters are in line with the knowledge
and intuition. GDP and FDI_BOP have positive parameter estimate signs, while nuclear
and hydro energy consumption have negative signs. Additionally, the parameter estimate
for the GDP is higher than in 2015 and is supported by the positive value of FDI_BOP. The
trade openness has a negative parameter estimate. Such variables focus on the economic
and energy factors that mostly influence renewable energy consumption in European
countries. The GDP and FDI support investments in the renewable energy sector; thus,
their positive impact aligns with economic logic.
On the other hand, nuclear and hydro energy consumption compete with the renew-
able energy sector (https://energypost.eu/renewable-energy-versus-nuclear-dispelling-
myths/ (accessed on 24 July 2021)). However, the recent findings support renewable
energy as much faster in building the infrastructure as compared with the nuclear one
(2019 World Nuclear Industry Status Report, available at https://www.worldnuclearreport.
org/-World-Nuclear-Industry-Status-Report-2019-.html (accessed on 24 July 2021)). The
trade openness, measured as the sum of a country’s exports and imports as a share of that
country’s GDP (in %), shows a negative sign, which is in line with the findings presented
in the literature [31,54].
Energies 2021, 14, 7526 13 of 24
Three important issues need to be clarified. Firstly, European countries gradually

introduced renewable energy sources, and after ratifying the Paris Agreement, they were
ready to fight against climate change. Secondly, countries in Europe are diversified con-
cerning the infrastructure in the energy sector. Thirdly, the European countries are quite
homogenous as concerning social and institutional environments; therefore, the variables
included in social and institutional groups did not impact renewable energy consumption.
Tables A3 and A4 include the top three models according to their posterior probabili-
ties for 2015 and 2018, respectively. The total probability of the presented models is 0.0270
(2015) and 0.0258 (2018), so it is easy to see that the best models have a very low posterior
probability. This means that there is no one dominant specification, and inferences based
on only one model can be very misleading because each of them has very low explanatory
power. The top three models consist of 7–12 variables, and some of them are significant
in a single regression. Still, due to the small explanatory power of the model, they have
low PIP values and thus do not significantly impact the dependent variable. This means
our results justify the necessity of using the model averaging (BACE) approach instead of
a single model selection procedure. There is one more important remark on the example
models. In 2015, the division into top developed countries and the former Eastern Bloc was
significant across all models, while in 2018, the dummies are less likely or insignificant.
4.2. Robustness Check

In order to confirm the empirical findings for variable and model selection obtained
by BACE, we performed robustness analysis using different prior model assumptions. We
applied the idea proposed in [55] and set different variants of the prior average model
size to check the sensitivity of variable selection results. In Section 4.1, the prior average
model size is set to E(Ξ) = K/2 (where K represents the number of all available independent
variables considered in the model). It means that the prior model distribution is uniform,
i.e., each model has an equal prior probability, and we do not prefer any specification. To
explore the robustness in more detail, we use two additional prior model sizes, namely:
E(Ξ) = K/3 and E(Ξ = K/4 (the most restrictive case). Table 4 presents the BACE estimates
for renewable consumption determinants in 2015 with different average prior model sizes,
while Table 5 shows the results for the 2018 year. The results contain values of PIP, average
coefficients, and average standard errors.
The comparison of the results revealed that there are no substantial differences in the
output between E(Ξ) = K/2, E(Ξ) = K/3, and E(Ξ) = K/4. Any observed differences are
negligible; therefore, the empirical results are robust.
The results for posterior estimates of the top 3 models for renewable consumption
determinants in 2015 and 2018 are presented in Tables A3 and A4, respectively.
Energies 2021, 14, 7526 14 of 24
Table 4. Posterior estimates of renewable consumption determinants in 2015 for different average prior model sizes.
E(Ξ) = K/2 E(Ξ) = K/3 E(Ξ) = K/4

Avg. Avg. Avg. Avg. Avg.
Variable PIP PIP PIP Avg. Std. Error
Coefficient Std. Error Coefficient Std. Error Coefficient
const 1.0000 10.9202 15.5713 1.0000 10.7550 15.4740 1.0000 10.8044 15.4340
NC 1.0000 −0.3141 0.0634 0.9999 −0.3150 0.0635 1.0000 −0.3144 0.0627
GDP 0.8834 0.0099 0.0056 0.8829 0.0099 0.0056 0.8820 0.0099 0.0056
FDI_BOP 0.3705 −0.0028 0.0055 0.3645 −0.0028 0.0055 0.3656 −0.0028 0.0055
TO 0.4940 −0.0077 0.0110 0.5033 −0.0078 0.0110 0.4945 −0.0077 0.0110
HC 0.7368 −0.1845 0.1607 0.7398 −0.1866 0.1607 0.7384 −0.1855 0.1606
GC 0.9933 −0.5105 0.1646 0.9930 −0.5118 0.1648 0.9957 −0.5109 0.1622
OC 0.9196 0.2859 0.1728 0.9181 0.2870 0.1732 0.9198 0.2859 0.1725
CC 0.2480 0.0058 0.0305 0.2375 0.0055 0.0300 0.2392 0.0055 0.0297
TDC 0.5894 7.1765 9.1039 0.5960 7.3017 9.1289 0.5867 7.2000 9.0915
SURF 0.6361 0.000006 0.000006 0.6437 0.000006 0.000006 0.6352 0.000006 0.000006
SET 0.3528 −0.0108 0.0224 0.3500 −0.0107 0.0223 0.3453 −0.0105 0.0220
PSA 0.1980 0.0586 0.8835 0.2025 0.0616 0.8837 0.1995 0.0606 0.8749
LEI 0.4445 −10.1697 16.4292 0.4384 −9.9560 16.3019 0.4369 −10.0044 16.3088
FEBC 0.3009 −0.0741 1.4099 0.2978 −0.0769 1.4074 0.3002 −0.0570 1.3982
UNEMP 0.3690 −0.0628 0.1405 0.3741 −0.0643 0.1406 0.3639 −0.0629 0.1389
CCUR 0.4248 −0.9699 1.8046 0.4266 −0.9818 1.8108 0.4193 −0.9519 1.7880
RL 0.2933 0.4730 1.7139 0.2933 0.4749 1.7128 0.2872 0.4576 1.6893
EI 0.2326 0.4600 7.8276 0.2335 0.4740 7.8625 0.2289 0.3891 7.6372
Table 5. Posterior estimates of renewable consumption determinants in 2018 for different average prior model sizes.
E(Ξ) = K/2 E(Ξ) = K/3 E(Ξ) = K/4

Variable Avg. Avg. Avg. Avg.
PIP PIP PIP Avg.Coefficient Avg. Std. Error
Coefficient Std. Error Coefficient Std. Error
const 1.0000 6.3989 14.5596 1.0000 6.3212 14.3276 1.0000 6.2041 14.1475
NC 0.9992 −0.2503 0.0767 0.9992 −0.2504 0.0764 0.9996 −0.2499 0.0755
GDP 0.9808 0.0119 0.0042 0.9842 0.0119 0.0041 0.9868 0.0119 0.0041
FDI_BOP 0.9186 0.0184 0.0088 0.9187 0.0184 0.0088 0.9217 0.0185 0.0087
TO 0.8550 −0.0203 0.0126 0.8548 −0.0201 0.0125 0.8570 −0.0202 0.0125
HC 0.7770 −0.1481 0.1294 0.7804 −0.1477 0.1281 0.7856 −0.1486 0.1276
GC 0.4701 −0.1247 0.2003 0.4695 −0.1249 0.1994 0.4641 −0.1233 0.1971
OC 0.4443 0.0673 0.1206 0.4381 0.0661 0.1191 0.4361 0.0650 0.1168
CC 0.4036 0.0258 0.0452 0.4008 0.0257 0.0449 0.4022 0.0256 0.0447
TDC 0.3741 −0.5901 6.9248 0.3769 −0.6803 6.8824 0.3741 −0.7285 6.7650
SURF 0.3274 0.000001 0.000004 0.3160 0.000001 0.000004 0.3183 0.000001 0.000004
SET 0.3048 0.0082 0.0208 0.2985 0.0079 0.0203 0.3047 0.0082 0.0204
PSA 0.2994 0.6116 1.5392 0.2873 0.5748 1.4895 0.2935 0.5881 1.4970
LEI 0.2966 −5.8818 15.5512 0.2934 −5.7424 15.3203 0.2903 −5.6288 15.1293
FEBC 0.2430 −0.2563 1.0624 0.2412 −0.2475 1.0388 0.2328 −0.2437 1.0167
UNEMP 0.2291 0.0091 0.1133 0.2237 0.0089 0.1111 0.2217 0.0088 0.1095
CCUR 0.2136 −0.1381 0.8091 0.2109 −0.1309 0.7841 0.2086 −0.1315 0.7773
RL 0.2083 0.1680 1.0496 0.2038 0.1635 1.0231 0.2049 0.1612 1.0141
EI 0.1901 0.0202 5.8023 0.1839 0.0009 5.5651 0.1789 −0.0050 5.4166
Energies 2021, 14, 7526 15 of 24
5. Discussion and Conclusions

Application of the BACE procedure provides a reliable result since it allows to search
the entire model space to find the most likely determinants of renewable energy con-
sumption. Furthermore, it gives robust results against more restrictive models. The most
important advantages of the model averaging were indicated in [2,56]. The first one is
including the model uncertainty into the model selection procedure, which reduces over-
confidence in a single model. Furthermore, it avoids the all-or-nothing mentality that is
associated with classical hypothesis testing, where a model is either accepted or rejected
wholesale. BACE gracefully updates its estimates as the data accumulate and the result-
ing model weights are continually adjusted. Finally, BACE is relatively robust to model
misspecification. The successful application of BACE is possible for different databases as
cross-sectional data, time-series data, and panel data [57–59].
The study focuses on European countries because Europe, although quite keen on
promoting renewable energy sources, is still diversified in using energy from different
sources. Mainly, Central and Eastern European countries are mostly underdeveloped in
investments in the renewable energy sector. European countries tend to realize sustainable
energy plans. Although, between 2015 and 2018, the total primary energy consumption
in Europe has increased by 2.7% from 1996.8 to 2050.7 (Mtoe) but the production of fossil
fuels was reduced. The total oil production was reduced by 2.16%, and gas production
decreased by 4.22% from 2015 to 2018. The most significant reduction was observed in coal
production (reduction by 9.19%) and consumption (reduced by 9.46%). Europe is in one of
the top positions in renewable energy consumption, fluctuating from 141.5 to 172.2 Mtoe
from 2015 to 2018, which indicates a 21.70% change [60].
In the current study, we put the research question on determinants of renewable energy
consumption in European countries. Using the BACE approach, substantial differences
between factors observed in 2015 and 2018 were found. In 2015, GDP was the only economic
variable that supported energy consumption from renewable sources. The other factors
comprised the alternative energy sources competing with REC. In 2018, GDP supported by
the FDI and Trade Openness are responsible for the country’s investments in the renewable
energy sector. The alternative energy sources such as nuclear energy and hydro energy
remained reasonably likely. Considering the technological and environmental viewpoints,
it is clear that nuclear energy, due to its enormous efficiency, must support “purely”
renewable energy sources. There is a discussion of whether nuclear energy can be thought
of as a renewable one (https://world-nuclear.org/information-library/energy-and-the-
environment/renewable-energy-and-electricity.aspx, accessed 25 October 2021).
When comparing the results with the findings presented in the literature, Ref. [61]
indicated that income is significant as a factor of renewable energy consumption. She
focused on financial variables that can be omitted in developed economies but cannot be
excluded in developing ones because RE technologies require a high upfront investment.
The question arises whether a qualitative change resulting from the study comes
directly from the Paris Agreement ratified in 2016. On one side, the strong warnings on
the effects of climate change resulted in the energy policy change in European countries,
particularly, the energy based on fossil fuels was remarkably reduced. The difference can
be visible in both household and industry sectors. On the other side, there is no evidence
in the literature that over five years after the Paris Agreement, a rapid limitation in gas
emissions could be observed. Ref. [62] indicated signs of progress, such as several nations
that strengthen their initial pledges by promising to cut their net climate emissions to zero
by 2050. These are the European Union, Canada, South Korea, Japan, South Africa, the
United Kingdom, and recently, the USA. Furthermore, China declared cutting climate
pollution faster than initially promised, aiming for carbon neutrality by 2060. There are
also signs that the temperature spikes predicted for later this century are easing slightly.
The changes are relatively slow, and the COVID-19 pandemic changes its direction. There
are some adverse examples such as USA climate policy under the Trump presidency and
deforestation in the Amazon (Brazil), which enabled global emissions of warming gases
Energies 2021, 14, 7526 16 of 24
to continue climbing to a record high in 2019. The pandemic year 2020 has stopped the
emissions in the short run.
What is worth noting, is that the Paris Agreement increased global awareness of
climate change and its consequences. It is in line with the results obtained by [11]. They
suggested that environmental concern is an essential factor in explaining participation of
renewables in different countries.
As comes from the results of this study, there is a divergence concerning REC in
Europe. Although renewable energy requires both new investments in infrastructure
and social acceptance, the increase of the REC in Europe is visible. As it was mentioned,
the renewable energy plans require new investment as well as changing the structure of
the energy sector by replacing old energy infrastructure with a new one. It is related to
closing traditional industries, local environment changes, and construction of new energetic
complexes. Increasing GDP and FDI inflow can help activate the changes, particularly
in less advanced countries such as Croatia, Cyprus, Latvia, Lithuania, Poland, Romania,
Slovakia, and Slovenia. The presence of trade openness in 2018 as the factor influencing
renewable energy consumption aligns with the results presented in [15].
However, there remains a social context of the aforementioned changes. Ref. [63]
prepared a literature review on the social acceptance of renewable energy projects (REP) in
European countries. They found that social acceptance is a significant barrier in the imple-
mentation of REP. They argued that governments must consider the general trends in local
acceptance and create a framework that will increase the probability of local acceptance,
and reduce the chances of an opposition network that will hinder the development of an
REP Trust in principal actors which remains a significant driver in local acceptance. It has
been demonstrated that to foster acceptance of renewable energy projects, the public must
gain trust in local authorities and developers. To achieve the goal, full transparency of the
project is recommended.
The study confirmed that the global awareness of climate change increased after the
Paris Agreement creating room for changing the energy policy in both developed and
developing countries in Europe. Although the change is gradual and divergence tendencies
are quite strong, the investments in the RE sector and GDP redistribution allow achieving
climate neutrality goals.
The limitation of the study is that it covers cross-sectional data from two years: 2015
and 2018. It seems too short of catching the changes that resulted from the Paris Agreement,
with soundness being fairly high. Based on the experience of the current study, further
research plans are fostered. The next attempt is to consider determinants of the REC from a
worldwide perspective. Both developed and developing countries should be taken into
account. The panel data approach is also planned. The final step of the research is to
combine renewable energy consumption and production with the green economic growth
indicator. It will also be interesting to measure the impact of the COVID-19 pandemic on
the REC in different countries.
Author Contributions: Conceptualization, A.M.K., J.K. and M.O.; methodology, J.K. and M.O.;
software, J.K. and M.B.; validation, J.K. and M.B.; formal analysis, A.M.K., J.K. and M.O.; investigation,
A.M.K. and J.K.; resources, A.M.K.; data curation, A.M.K.; writing—original draft preparation,
A.M.K., J.K. and M.O.; writing—review and editing, A.M.K., J.K. and M.O.; visualization, A.M.K.,
J.K. and M.O. All authors have read and agreed to the published version of the manuscript.
Funding: This research received no external funding.
Institutional Review Board Statement: Not applicable.
Informed Consent Statement: Not applicable.
Data Availability Statement: Not applicable.
Conflicts of Interest: The authors declare no conflict of interest.
Energies 2021, 14, 7526 17 of 24
Appendix A
Table A1. Descriptions of variables.
Abbreviation
No. Variable Name Proxy/Scale of Measurement Data Source
of Variable
Energy-based Variables
1 REC Renewable consumption million tons of oil equivalent to exajoules (Mtoe) BP-2019
2 OC Oil consumption million tons of oil equivalent to exajoules (Mtoe) BP-2019
3 GC Gas consumption million tons of oil equivalent to exajoules (Mtoe) BP-2019
4 CC Coal consumption million tons of oil equivalent to exajoules (Mtoe) BP-2019
5 HC Hydro consumption million tons of oil equivalent to exajoules (Mtoe) BP-2019
6 NC Nuclear consumption million tons of oil equivalent to exajoules (Mtoe) BP-2019
Economic Variables
7 GDP Gross Domestic Product Data are in constant 2010 US dollars. WDI-2019
8 TO Trade openness Trade openness = Exports of goods and services (% of GDP) + Imports of goods and services (% of GDP). WDI-2019
Foreign direct investment, net Foreign direct investment refers to direct investment equity flows in the reporting economy. It is the sum of equity capital,
9 FDI_BOP WDI-2019
inflows (BOP) reinvestment of earnings, and other capital. Data are in current US dollars.
Unemployment refers to the share of the labor force that is without work but available for and seeking employment.
10 UNEMP Unemployment, total WDI-2019
Measured in % of the total labor force.
Social Variables
Political stability and absence Political stability and Absence of violence/terrorism measures perceptions of the likelihood of political instability and/or
11 PSA. WGI-2020
of violence politically-motivated violence, including terrorism.
Reflects perceptions of the extent to which agents have confidence in and abide by the rules of society, and, in particular,
12 RL Rule of law the quality of contract enforcement, property rights, the police, and the courts, as well as the likelihood of crime and WGI-2020
violence.
Reflects perceptions of the extent to which public power is exercised for private gain, including both petty and grand
13 CCUR Control of corruption WGI-2020
forms of corruption, as well as “capture” of the state by elites and private interests.
http://hdr.undp.org/en/
Education index is an average of mean years of schooling (of adults) and expected years of schooling (of children), both
14 EI Education index indicators/103706
expressed as an index obtained by scaling with the corresponding maxima.
(accessed on 25 June 2021)
http://hdr.undp.org/en/
15 LEI Life expectancy index Life expectancy at birth expressed as an index using a minimum value of 20 years and a maximum value of 85 years. indicators/103206103706
(accessed on 25 June 2021)
The gross enrollment ratio is the ratio of total enrollment, regardless of age, to the population of the age group that
16 SET School enrollment, tertiary WDI-2019
officially corresponds to the level of education shown. measured in (% gross).
Other Variables
Surface area is a country’s total area, including areas under inland bodies of water and some coastal waterways. measured
17 SURF Surface area WDI-2019
in (sq. km).
Dummy Variables
Dummy variable if a country is a member of the G-7, group of world’s advanced economies and wealthiest liberal
18 TDC Top developed countries Authors elaboration
democracies.
19 FEBC Former Eastern Bloc Dummy variable if a country was a member of the Eastern Bloc. Authors elaboration
Energies 2021, 14, 7526 18 of 24
Table A2. Descriptive statistics for energy consumption according to different sources in European countries.
Source Oil Consumption Gas Consumption Coal Consumption

Years 1995 2000 2005 2010 2015 2018 1995 2000 2005 2010 2015 2018 1995 2000 2005 2010 2015 2018
Mean 25.5868 26.4246 27.2254 25.1221 22.8585 23.5671 11.9391 14.2396 16.0359 16.1486 12.9957 14.2033 12.7343 11.2384 11.0827 9.7995 9.1320 7.7798
S.E. 6.7471 6.7588 6.6116 6.0195 5.4955 5.5243 3.5395 4.2928 4.6006 4.5435 3.6295 4.0108 4.0922 3.6148 3.4981 3.3070 3.1943 2.8294
Med 11.2194 10.8897 11.0132 10.7220 10.0999 10.5758 3.0019 4.0149 4.1146 4.5813 3.8785 4.2757 4.8950 3.9199 3.8506 3.7908 3.2514 3.0665
S.D. 35.7025 35.7644 34.9852 31.8520 29.0794 29.2317 18.7294 22.7155 24.3439 24.0421 19.2053 21.2232 21.6539 19.1275 18.5103 17.4990 16.9028 14.9718
Kurt 3.3606 2.5040 1.6758 1.8892 2.6849 2.2979 3.3539 4.1808 2.9618 2.6442 2.5919 2.9565 7.0533 8.6580 7.9418 8.9482 11.3421 10.6100
Skew 2.0038 1.8380 1.6656 1.6737 1.8107 1.7290 2.0433 2.2053 1.9877 1.9135 1.9006 1.9648 2.6952 2.8583 2.7512 2.9604 3.2493 3.2712
Range 138.9582 134.1266 126.1889 118.0561 112.6862 111.6916 66.8421 87.1382 85.4571 84.6886 66.1682 75.9176 90.5155 85.2689 81.2447 77.0423 78.6773 66.3859
Min 1.3299 1.1655 1.4394 1.4336 1.4848 1.5026 0 0 0 0 0 0 0.1070 0.0360 0.0440 0.0147 0.0033 0.0133
Max 140.2881 135.2921 127.6283 119.4897 114.1710 113.1941 66.8421 87.1382 85.4571 84.6886 66.1682 75.9176 90.6225 85.3049 81.2887 77.0569 78.6806 66.3992
Obs 28 28 28 28 28 28 28 28 28 28 28 28 28 28 28 28 28 28
Source Hydro Consumption Renewable Consumption Nuclear Consumption
Years 1995 2000 2005 2010 2015 2018 1995 2000 2005 2010 2015 2018 1995 2000 2005 2010 2015 2018
Mean 3.9275 4.3418 3.8380 4.2364 4.1194 4.1456 0.2409 0.5116 1.2068 2.4582 4.8355 5.7405 7.1857 7.7039 8.1038 7.4965 6.9924 6.7636
S.E. 1.2203 1.3679 1.2593 1.1868 1.2995 1.2958 0.0667 0.1470 0.3936 0.7882 1.5340 1.8756 3.2612 3.5624 3.8111 3.5740 3.5644 3.3637
Med 0.9256 0.9559 1.0466 1.0880 1.1500 1.1514 0.0700 0.1095 0.3433 0.7046 2.0728 2.2679 0.4546 0.9821 1.0807 0.4491 0.4614 0.3953
S.D. 6.4572 7.2384 6.6636 6.2802 6.8763 6.8567 0.3528 0.7778 2.0829 4.1707 8.1170 9.9248 17.2567 18.8502 20.1666 18.9117 18.8611 17.7989
Kurt 6.0942 7.5019 9.6198 4.7663 8.3324 8.6433 4.9283 4.5466 10.2783 9.7951 10.7530 11.5624 16.4649 17.2537 18.7523 19.9556 22.8416 22.7416
Skew 2.3838 2.5596 2.8797 2.0801 2.6703 2.6869 2.0445 2.0316 2.9772 2.9885 3.0497 3.1839 3.8487 3.9592 4.1321 4.2727 4.6172 4.5977
Range 27.4992 32.0899 30.7028 26.4176 31.0680 31.3382 1.4979 3.2366 9.6991 19.0421 38.3485 47.2298 85.3580 93.9408 102.1698 96.9636 98.9790 93.4905
Min 0 0 0 0 0 0 0 0 0.0002 0.0165 0.0750 0.1049 0 0 0 0 0 0
Max 27.4992 32.0899 30.7028 26.4176 31.0680 31.3382 1.4979 3.2366 9.6993 19.0586 38.4235 47.3347 85.3580 93.9408 102.1698 96.9636 98.9790 93.4905
Obs 28 28 28 28 28 28 28 28 28 28 28 28 28 28 28 28 28 28
Note: Med: Median; S.E. = Standard error; S.D. = Standard deviation; Kurt = Kurtosis; Skew = Skewness; Min = Minimum; Max = Maximum; Obs = Observations.
Energies 2021, 14, 7526 19 of 24
Table A3. Posterior estimates of top 3 models for renewable consumption determinants in 2015.
Variables Coefficient Std. Error t-Stat p-Value

Model 1. Posterior probability: 0.010350
Const 9.2429 3.5399 2.6110 0.0090
NC −0.3798 0.0381 −9.9660 <0.0001
TO −0.0205 0.0077 −2.6490 0.0081
HC −0.3540 0.0979 −3.6170 0.0003
GC −0.6612 0.1026 −6.4430 <0.0001
OC 0.3574 0.1019 3.5090 0.0005
TDC 14.5325 5.0625 2.8710 0.0041
SURF 0.00001 0.000004 3.1190 0.0018
FEBC −2.3601 1.6237 −1.4540 0.1461
UNEMP −0.3520 0.1299 −2.7090 0.0067
CCUR −2.6847 1.0634 −2.5250 0.0116
GDP 0.0083 0.0034 2.4630 0.0138
Const 4.5462 1.4922 3.0470 0.0023
NC −0.3643 0.0378 −9.6470 <0.0001
TO −0.0147 0.0069 −2.1480 0.0317
HC −0.2807 0.0866 −3.2420 0.0012
GC −0.6316 0.1038 −6.0830 0.0000
OC 0.3625 0.1051 3.4500 0.0006
TDC 13.2797 5.1492 2.5790 0.0099
SURF 0.00001 0.000004 2.6740 0.0075
UNEMP −0.2083 0.0870 −2.3940 0.0167
CCUR −1.3370 0.5374 −2.4880 0.0129
GDP 0.0082 0.0035 2.3740 0.0176
Energies 2021, 14, 7526 20 of 24
Table A3. Cont.

Const 8.2507 3.5768 2.3070 0.0211
NC −0.3950 0.0395 −10.0000 <0.0001
TO −0.0238 0.0081 −2.9460 0.0032
HC −0.3467 0.0965 −3.5920 0.0003
GC −0.6747 0.1016 −6.6390 <0.0001
OC 0.3862 0.1030 3.7510 0.0002
TDC 17.3483 5.4843 3.1630 0.0016
SURF 0.00001 0.000004 3.2710 0.0011
FEBC −2.2588 1.6005 −1.4110 0.1581
UNEMP −0.3235 0.1300 −2.4890 0.0128
CCUR −4.5852 1.8667 −2.4560 0.0140
RL 2.6548 2.1589 1.2300 0.2188
GDP 0.0069 0.0035 1.9710 0.0487
Energies 2021, 14, 7526 21 of 24
Table A4. Posterior estimates of top 3 models for renewable consumption determinants in 2018.

Const 2.1936 1.0344 2.1210 0.0340
GC −0.2202 0.0944 −2.3320 0.0197
NC −0.2864 0.0370 −7.7330 <0.0001
HC −0.1698 0.0637 −2.6670 0.0077
TO −0.0207 0.0072 −2.8640 0.0042
OC 0.1226 0.0572 2.1440 0.0320
GDP 0.0126 0.0025 5.0630 <0.0001
FDI_BOP 0.0188 0.0050 3.7280 0.0002
Const 1.7875 1.2368 1.4450 0.1484
NC −0.2087 0.0323 −6.4680 <0.0001
HC −0.1499 0.0603 −2.4850 0.0130
TO −0.0184 0.0080 −2.3060 0.0211
TDC −7.7559 3.4780 −2.2300 0.0257
GDP 0.0131 0.0010 12.5300 <0.0001
FDI_BOP 0.0239 0.0050 4.8050 <0.0001
Const 1.8534 1.1568 1.6020 0.1091
GC −0.2145 0.0977 −2.1960 0.0281
NC −0.2960 0.0392 −7.5540 <0.0001
HC −0.3334 0.1055 −3.1590 0.0016
TO −0.0187 0.0077 −2.4360 0.0148
SURF 0.00001 0.000004 1.7460 0.0809
GDP 0.0156 0.0023 6.9230 <0.0001
FDI_BOP 0.0137 0.0056 2.4380 0.0148
Energies 2021, 14, 7526 22 of 24
Coefficient of variation for energy consumption in European countries

280
260
240
220
C.V. (%)
200
180
160
140
120
1995 2000 2005 2010 2015 2018
Years
Oil_Con Gas_Con Coal_Con Hydro_Con Ren_Con Nuc_Con
Figure A1. Energy

Figure consumption
A1. Energy consumption coefficient of variation
coefficient of variation 1995–2018.
1995–2018.
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energies

Publisher’s Note: MDPI stays neutral

Energies 2021, 14, 7526. https://doi.org/10.3390/en14227526 https://www.mdpi.com/journal/energies

In recent debates around the world, the importance of RE in economic development

Table 1. Summary of previous studies on determinants of renewable energy consumption.

Share of energy from renewable sources

2015 overall energy 2018 overall energy 2020 overall target

Energies 2021, 14, 7526 8 of 24

3. Materials and Methods

Share of energy from renewable sources

2015 overall energy 2018 overall energy 2020 overall target

Countries Codes Countries Codes Countries Codes Countries Codes

location µ and covariance Σ.

where β̂ i and Var ( β i ) are the OLS estimates of β i from model Mi .

Another useful and popular characteristic in model averaging is so-called posterior

Table 3. Posterior estimates of renewable consumption determinants in 2015 and 2018.

The results in Table 3 exhibited a substantial difference between factors of REC in

Three important issues need to be clarified. Firstly, European countries gradually

4.2. Robustness Check

E(Ξ) = K/2 E(Ξ) = K/3 E(Ξ) = K/4

E(Ξ) = K/2 E(Ξ) = K/3 E(Ξ) = K/4

5. Discussion and Conclusions

Table A1. Descriptions of variables.

Source Oil Consumption Gas Consumption Coal Consumption

Variables Coefficient Std. Error t-Stat p-Value

Table A3. Cont.

Variables Coefficient Std. Error t-Stat p-Value

Variables Coefficient Std. Error t-Stat p-Value

Energies 2021, 14, x FOR PEER REVIEW 21 of 23

Coefficient of variation for energy consumption in European countries

Oil_Con Gas_Con Coal_Con Hydro_Con Ren_Con Nuc_Con

Figure A1. Energy

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