Income inequality and renewable energy consumption: Time-varying non-parametric evidence

We examine the effect of income inequality on renewable energy consumption, and its disaggregated components, for a panel of 17 nations over the period 1990 to 2016. We assess this relationship in a dynamic framework by tracing the time-varying evolution using non-parametric techniques. This framework enables us to pin down, at each point in time, the effect of income inequality on renewable energy and how the relationship evolved over time. The results show a time-varying effect, where for a short period between 1995 and 2002, the relationship was negative. From 2010 onwards the relationship then switches to positive. We also observe heterogeneous effects of income inequality depending on the measure of renewable energy used. The time-varying effects reflect that income inequality influences renewable energy consumption via various channels, and at specific times, some channels appear to be more dominant. Thus, the findings from this study highlight the need for policymakers to pay close attention to the role of income inequality when developing policies for the uptake of or transition to renewable energy, and particularly the need to be dynamic with policy formulation, taking into account the channels through which income inequality works.