Volume 7, Issue 10, October – 2022 International Journal of Innovative Science and Research Technology

ISSN No:-2456-2165

Renewables Share and Fossil Fuel Prices,

Carbon Emissions and Global Warming:
A Case Study of German Electricity Market
Zeeshan Mukhtar, Sergio Vergali
Department of Economics and Management,
Universitàdegli Studi di Brescia Italy

Abstract:- Human activities to achieve stable economic Since the industrial Revolution, demand for energy
growth has contributed substantially to global warming increased immensely and across the world fossil fuels have
and pollution because of emission of carbon dioxide and seen significant growth for the production of electricity. As
other heat trapping gases. I studied the Germany an economy grows, so does the pollution causing sever
Electricity market, Renewables share in total Electricity threats to human health and global climate. Burning of fossil
production, carbon emissions from 1985 to 2020. And for fuels for the sake of energy has caused three-quarters
the empirically analysis, I used datasets from ESTAT emissions of greenhouse gases, air pollution, and premature
and Federal Ministry for Economic affairs and Energy deaths. Pollution has caused at least more than five million
(BMWi) Germany and checked the impact of fossil fuel premature deaths every year. Due to air pollution and
prices on electricity share coming from renewables. emission of toxic and hazardous air pollutants, gases like
Which showed insignificant results with fossil fuels price hydrogen chloride, dioxin, benzene, compounds like
and showed significant relationship with carbon asbestos and elements such as mercury, chromium and
emissions and global rising temperatures. Which shows cadmium, Millions of people are under threat. Because of
there doesn’t exist a relationship with prices but does theses toxic pollutants people may experience irritation of
with global warming and carbon emissions. the eyes, coughing, breathing difficulties, birth problems,
lung and heart problems and urban smog etc. (WHO).
Keywords:- Renewables, Global warming, Fossil fuels,
Electricity production. The industrial revolution introduced the new transition
in manufacturing in Great Britain, Central Europe and the
I. INTRODUCTION United States during 1750 to 1820. By mid of 19 th century,
industrial revolution brought a significant shift in energy
Renewable Energy refers to a form of energy that is sources and the demand for energy was felt very high to
naturally obtained from the sources which are environment fulfill the domestic and industrial needs. During 2005, the
friendly and that can be recycled or replenished. Most of the worldwide consumption of fossil primary energy carriers
known renewables are solar energy, hydropower, and of hydropower amounted to approx. 441EJ/1-3/
geothermal, wind energy, and biomass energy (Walter Leal (Kaltschmitt, and Streicher,2007). The statistics showed
Filho, 2021). We need energy every single day of our lives 28% of the overall energy consumption account for Europe,
from providing fuels to our homes, offices, hospitals, 27% for North America, about 5% for Central and South
schools, everywhere either with domestic oil or electricity America, 5% for Middle East, 3% for Africa and 32% for
from national grids for lighting, heating and to empower our Asia and pacific region. Around 90% energy driven from
electronic devices. Electricity was one of the birthplace of the fossil energy carried by North America, Europe and
moving forward and progression in the Industrial Revolution Asia.
(E. A Wrigley, 2013). In 1831, Faraday discovered an
electric current and it emerged as a revolutionary change in As for the environmental pollution, CO2is now
economy as they succeeded to build an electric generator in reaching 50% higher than before the industrial revolution
1832. And ever since, the use of electricity marked and the research showed during March 2021 the
significant growth in every sector of life. And it marked the atmospheric level exceeded 417 parts per million for Mauna
development of electrical powered machines to replace Lao whereas the pre industrial level of CO2 was 278ppm.
steam powered machines in industry. And in 1870 first
electric motor was built and it completely changed the
industrial sector (Hirshfeld, 2006).

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Volume 7, Issue 10, October – 2022 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165

Fig. 1: Carbon Emissions cycle

(https://books.google.com.pk/books?hl=en&lr=&id=I4g0mlQI7HcC&oi=fnd&pg=PA1&dq=renewable+energy+and+economics
&ots=IgoeBGErfi&sig=wxuOYSAolLafgIEcot-
9TBxQSqw#v=onepage&q=renewable%20energy%20and%20economics&f=false)

The above graph is showing the annual cycle of because of excessive emission of carbon dioxide Earth’s
atmospheric CO2 level. Statistics are showing that global average temperature is rising and this phenomenon is called
CO2 decreased by 5.8% in 2020. This was the largest global warming. To reduce emission of carbon dioxide and
decline and almost five time higher than the 2009 global other deadly gases and elements, the world needs to shift
financial crises. CO2 carbon dioxide is the primary towards low carbon sources of energy. Renewable energy
greenhouse gas causing global warming. It acts like a sources are clean, safe, inexhaustible, and most importantly
blanket, trapping heat and results harmful activities such as they are available everywhere. On the contrary, Fossil fuels
stronger storms, sea level rise, drought, extinction and such as oil, natural gas, and coal are available in finite
temperature rise. And most of these emissions come from quantities. And as we are keep extracting them, it might be
burning of the fossil fuels (oil, natural gas, and coal) for possible they will run out sooner or later. Renewables differ
energy and transportation. The combustion of gasoline and from fossil fuels in terms of their diversity, potential, and
diesel in transportation sector was the largest source of abundance. And above them all they do not produce any of
carbon dioxide emissions in 2019, accounting for 35%, the deadly greenhouse gases nor polluting emissions.
followed by the electricity sector with 31% and industry by
16%, while the combustion of fossil fuels for the residential The air and water pollution caused by the burning of
and commercial use results 11 % of the Carbon dioxide fossil fuels such as oil natural gas and coal is linked with
emissions. Since the Industrial Revolution, human activities sever health problems such as neurological damage, heart
to achieve stable economic growth has contributed attacks, cancer, breathing problems, premature deaths etc.
substantially to global warming and pollution because of Most of these deadly diseases are linked with air and water
emission of carbon dioxide and other heat trapping gases. pollution that clean energy resources simply do not produce.
Today, the global energy production system is dominated by
Along with risking human health, air pollution has fossil fuels but most of the major economies of the world are
caused a variety of environmental damages such as Acid investing on renewables energy plants to overcome global
rain, Eutrophication, haze, depletion of ozone, effects on warming and tackling with environmental issues.
wildlife, crop and forest damages, and most importantly Renewable energy sources such as Wind, solar and
global climate change. These acids are formed because of hydroelectric energy systems produce electricity with zero
uncontrolled emission of deadly gases like nitrogen oxides air pollutions emissions. Geothermal and biomass energy
and sulfur oxides when fossil fuels are burned to produce system do emit little air pollutants but the ratio of air
energy for domestic or industrial use. Carbon dioxide and emissions caused by them is much lower than those of fossil
methane commonly known as greenhouses gases caused fuel power plants.
damages to natural balance of Earth’s temperature.And

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Volume 7, Issue 10, October – 2022 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165

Fig 2: 2019 US carbom dioxde Emissions

In this chart we consider the death rates from energy hydropower, it will take 42 years, and for the solar, it will
production per terawatthour. One terawatt hour is equal to take 53 years to cause a death. In addition, wind and solar
annual electricity consumption of about 187,000 citizens energy plants require no water to operate and do not pollute
living in Europe. Markandya and Wilkinson et al. (2016) any water resources. On the other hand, Geothermal and
took an example to describe this term, like for example in a biomass power plants, oil, natural gas and coal-fired power
town of 187,090 residents, if electricity is generated from plants require excessive amount of water for cooling down
coal, we will expect that 25 people will die prematurely process.
because of pollution caused by the burning of coal. And
electricity is produced by the oil, pollution will cause 18 Fossil fuel technologies are basically capital intensive
people to lose their life prematurely. And natural gas will and mechanized, while renewable energy industry is more
cause three people to die. And if we see death rates labor intensive. Labor is required to install solar panels, and
associated with nuclear nobody will die in a year. It will for the maintenance of wind forms technicians are required.
take seven years before single person will die because of This means that, electricity generated from renewable
nuclear. And for the Wind, it will take 29 years, sources will create more jobs than of fossil fuels.

WIND 0.035
SOLAR 0.019
OIL 18.43
NUCLEAR 0.071
HYDROPOWER 0.0235
GAS 2.821
COAL 24.62
BROWN COAL 32.72
BIOMASS 4.63
BIOFUELS 0.0048
Fig. 3: Death rates from energy production per TWH

Source: MARKANDYA & WILKINSON; SOVACOOL ET AL. (2016)

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Volume 7, Issue 10, October – 2022 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
This graph depicts the number of people in millions II. SHARE OF ELECTRICITY FROM RENEWABLES
employed worldwide in renewable energy. Which shows the IN GERMANY
consistent growth in numbers from 7.28 million employed
people in renewable energy sector in 2012 to 12 million in During the last few years, electricity generation from
2020, reflecting a 4% increase than previous year. Increased the renewable energy sources has seen a constant growth in
support for clean energy will produce more jobs in the the World because of global warming and pollution. Since
future. According to the International Renewable Energy 1990 energy coming from Renewables has been growing
Agency (IRENA), it has been seen 34 % growth in jobs in with an average 2% annually, but in the most recent years
Renewable energy sector since 2013, adding additional three this growth rate is more than 5% on average. Germany has
million jobs in world economy. been often called as “the world’s first major Renewable
Energy Economy”. Until 2014, Germany had the world’s
largest photovoltaic installed capacity. Germany has the
highest installed wind capacity in Europe and third largest
economy after China and United states of America.

14
12.03
12 11.46
number of jobs in millions

10.53 10.98
10.04 10.13
10 9.5

8 7.28
5.55
6

0
2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: Statista 2021

Fig. 4: People Employed in Renewable energy sector

Share of electricity in 2020

Renewables
11%
Coal
4%
Natural Gas
16% 44.89%, 45%
Oil

Nuclear
24%

Fig. 5: Share of Electricity Production of all sources in Germany in 2020

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Volume 7, Issue 10, October – 2022 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
70
shareofelectricityfromren
Coalelectricity
Gaselectricity
Oilelectricity
60 Nuclearelectricity

50

40

30

20

10

0
1985 1990 1995 2000 2005 2010 2015 2020

Fig. 6: Trends of Electricity Production of all sources in Germany (1985-2020)

shareofelectricityfromren Coalelectricity Gaselectricity

45 65 18
40 60 16
35 55
30 50 14
25 45 12
20 40 10
15 35 8
10 30
5 25 6
0 20 4
1985 1993 2001 2009 2017 1985 1993 2001 2009 2017 1985 1993 2001 2009 2017

Hydroelectricity Solarelectricity Windelectricity

4.4 9 25
4.2 8
4 7 20
3.8 6
5 15
3.6
4 10
3.4 3
3.2 2 5
3 1
2.8 0 0
1985 1993 2001 2009 2017 1985 1993 2001 2009 2017 1985 1993 2001 2009 2017

Oilelectricity Nuclearelectricity Otherrenewableselectricity

5 32 9
4.5 30 8
28 7
4 26
3.5 24 6
22 5
3 20 4
2.5 18 3
2 16 2
14
1.5 12 1
1 10 0
1985 1993 2001 2009 2017 1985 1993 2001 2009 2017 1985 1993 2001 2009 2017

Fig. 7: Share of electricity consumption from all energy resources in Germany (1985-2020)

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Volume 7, Issue 10, October – 2022 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
The share of electricity consumption from renewable 2020. Share of wind and solar is particularly increasing
energy resources in Germany rose from 3.4% in 1990 to rapidly from 0 % in 1985 to 27.2% and 10.5%
10% in 2005 to 44 % in 2020. As with most of the countries simultaneously in the year 2020.
are still struggling with the process of transition to
Renewables either in transport or heating or cooling sectors. III. GLOBAL WARMING
In 2020, renewables produced more electricity than fossil
fuels like Coal, gas and oil and provided approximately 45 Temperature is a primitive measurement when it
% of the total electricity demanded in Germany. plotting the comes to describe climate, and the continuously rising
graphs separately of all energy sources we can clearly see an temperature in certain places have extensive effects on
upward trend in renewables (Wind, Solar, Biomass) and a human life and ecosystem of the world. For instance,
downward trend in fossil fuels (coal, natural gas, and oil). intensive heat waves because of higher air temperature can
Share of Electricity coming from the Nuclear technology is roots illness and deaths in extreme cases. Variations in
clearly decreasing from with 26.56% in 1985 to 11.3% in temperature is disrupting a wide range of natural processes.

0.8

0.6

0.4

0.2

-0.2

-0.4
1970 1980 1990 2000 2010 2020

Fig. 8: Global rising temperature (1965-2020)

Fig. 8: Carbon emissions trends

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Volume 7, Issue 10, October – 2022 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
The above mentioned graphs depicts the change in Since the Industrial Revolution, demand for energy has
global temperature from 1965 to 2020. Since 2000 the world been increased enormously and to meet that demand the
has seen the hottest 20 years. According to National Centers world was completely dependent on fossil fuels such as
for Environmental Information (NOAA’s) 2020 Annual coal, oil and natural gas. And the result of this burning
climate Report, the combined ocean and land temperature processes has significantly increased the emissions of
has risen of 0.13 degrees Fahrenheit 0r 0.08 degrees Celsius Carbon dioxide and other greenhouse gases like methane
per decade since 1880 and this rate has been twice since etc., which has not only increased the world’s temperature
1981 of 0.18°C / 0.32°F. Year 2020 was the second hottest but also created multiple health related issues, Urban smog,
year after 2007 in the last 141 years for the combined ocean and pollution. In the above mentioned graphs, we have
and land surface. Many parts of the Europe and Asia had discussed the Carbon dioxide emissions worldwide, there
seen the record temperature particularly in Spain, France, has been continuously increasing trends in Countries like
Northern Portugal, Russia, most of the Scandinavian China, India, Middle Eastern oil export countries.
Peninsula, and southern China.

AsiaExcludingChinaandIndia Europe india

8e+09 8.5e+09 7e+08

7e+09 8e+09 6e+08

7.5e+09
6e+09 5e+08
7e+09
5e+09 4e+08
6.5e+09
4e+09 3e+08
6e+09
3e+09 2e+08
5.5e+09
2e+09 5e+09 1e+08

1e+09 4.5e+09 0
1965 1978 1991 2004 2017 1965 1978 1991 2004 2017 1965 1978 1991 2004 2017

China World US
1.1e+10 4e+10 6.5e+09
1e+10
3.5e+10 6e+09
9e+09
8e+09 5.5e+09
3e+10
7e+09
6e+09 5e+09
2.5e+10
5e+09 4.5e+09
4e+09
2e+10
3e+09 4e+09
2e+09 1.5e+10 3.5e+09
1e+09
0 1e+10 3e+09
1965 1978 1991 2004 2017 1965 1978 1991 2004 2017 1965 1978 1991 2004 2017

Fig. 9: Comparatively Analysis of Carbon Emissions

But we can clearly see downward trends in United IV. LITERATURE REVIEW
States of America and European countries. For instance,
Eastern European States joined EU regulations of Clean Renewable energy and Global Challenges brings to
Energy and controlled carbon dioxide emissions and cleaned focus of this research and the various challenges that are
up their ineffective or inefficient infrastructure by declining being faced by the resources of energy. There are many
independence on fossil fuels and relying on clean energy other important things in the current world where the use of
sources. Similarly, in US coal is being replaced by natural renewable resources is experiencing some difficulties. This
gas and renewables and emission of carbon dioxide is being research will give a deep insight to us on the various aspects
controlled. On the other hand, situation in countries from related to renewable energy resources and how they can be
Asia and Africa needs to do lot of homework to tackle this used to produce energy in the future. This research also
issue. meaning of renewable resources, the various biotic and
abiotic resources and global warming effects.

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Volume 7, Issue 10, October – 2022 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
Quek&Ee et al, (2018) examined the sustainability by Chakravorty U., RoumassetJ. & TseK. (1997)
switching fossil based energy to renewable energy systems. presented a theory of resource extraction in their research
The study used CML methodology and four major impacts that focused mainly on extraction for the resource in case of
were calculated as global warming potential (GWP), homogenous demand for it. As a matter of fact, the study
acidification of potential (AP), eutrophication potential (EP) explained the simultaneous extraction of different resources
and human toxicity potential (HTP). From A to Z analysis such as oil, coal, and natural gas and multiple demands such
was conducted for various type of electricity supply sources as trasportation, residential and commercial heating, and
like solar photovoltaics (PV), biogas, municipal waste electricity generation. Through the multiple demand, grades
incineration, natural gas, coal and oil. The findings of the and resources, the study estimated extraction cost, estimated
study showed that electricity produced by solar PVs can reserves, and energy demand data for the world economy.
produce 10x time higher HTP than baseline and similarly The results showed that solar energy production will be
electricity produced by biogas eight time higher than AP and much cheaper than the production of energy through oil or
EP than baseline. So policies suggest that a mix of energy coal. Most probably the world will move from oil and
production (renewable and biogas) would be value based. natural gas use to solar energy. In this case, the Global
temperatures will rise by only about 1.5–2 degrees
Zoundi Z. (2017) studied the short and long term centigrade and soon decline steadily to preindustrial levels.
effects of renewable energy resources on CO2 emission and Further the research showed that the intergovernmental
the Kuznets Environmental Curve hypothesis for 25 selected Panel study on Climate Change overstated about global
African Countries. The findings of the study didn’t provide warming.
significant or no evidences of total validation. Shockingly,
CO2 emission showed significant relationship with income Bloch H., Rafiq S. & Salim R. (2015) examined the
per capita. The research concluded that renewable energy relationship between Chinese aggregate production and
had a negative impact on CO2 emission and this multiplies consumption of three main energy resources: coal, oil and
in the long run but remains efficient substitute for the renewables. The study used ARDL and VWCM modeling
conventional fossil fueled energy. technique and found significant impact of all three energy
resources on Chinese growth. Further the research observed
Moriarty P. &Honnery D (2019) explained the coal production negative impact on pollution while
different forms of energies produced by renewable resources renewable energy reduced emissions. As for oil, no
like biomass energy, hydroelectricity, wind energy, solar significant relationship on emission found. In the end, the
energy, and geothermal energy. According to them these study concluded that oil and renewable energy production
five types of energies will remain dominant till 2050s. They appeared relatively cheaper than coal and this shift also led
concluded in their study that the future of RE each type improvement in economic and environmental sustainability.
depend on the factors availability like future land use,
climate and other environmental changes. Further they V. ECONOMETRIC MODE
stressed the effects of RE production on the environment.
𝑦𝑡 = 𝛽0 + 𝛽1 𝑥1𝑡 + 𝛽2 𝑥2𝑡 + 𝛽3 𝑥3𝑡 + 𝛽4 𝑥4𝑡 + 𝑢𝑡
Sadorsky P. (2008) explained that economic and social
issues particular energy consumption and global warming Where our dependent variable 𝑦𝑡 is a share of the
raising greater need for renewable energy. The research renewables in total electricity production in Germany and
employed an empirical model for renewable energy 𝑥1𝑡 (price of oil per barrel), 𝑥2𝑡 (price of Coal per ton), 𝑥3𝑡 (
production for G7 countries. The findings of the study told average import price of Natural gas), and 𝑥4𝑡 (Total
that in the long run increased oil prices had negative impact Electricity production in Germany). we can re-write our
on the renewable energy consumption whereas CO2 per Model
capita appeared an important factor behind per capita
𝑆ℎ𝑎𝑟𝑒𝑜𝑓𝑟𝑒𝑛𝑒𝑤𝑎𝑏𝑙𝑒𝑠𝑡
renewable energy consumption. The short term shocks
= 𝛽0 + 𝛽1 𝑜𝑖𝑙𝑝𝑟𝑖𝑐𝑒𝑠𝑡 + 𝛽2 𝐶𝑜𝑎𝑙𝑝𝑟𝑖𝑐𝑒𝑠𝑡
caused deviation from equilibrium and France took 1.3 years
+ 𝛽3 𝑔𝑎𝑠𝑝𝑟𝑖𝑐𝑒𝑠𝑡 + 𝛽4 𝑇𝑜𝑡𝑎𝑙𝑒𝑙𝑒𝑡 + 𝑢𝑡
to correct it whereas Japan took 7.3 Years accordingly.

Qi T., Zhang X. &Karplus J. V (2014) found in their VI. METHODOLOGY AND DATA
study that during 2010 to 2020 that current renewable
In this study, I tried to see the impact of fossil fuel
electricity targets result in significant additional renewable
prices on electricity share coming from renewables. For this
energy installation and a reduction in CO2 emissions of
purpose, I used the time series data from year 1985 to 2020
1.8%. The interesting thing was that the reduction in CO2
from ESTAT and Federal Ministry for Economic affairs and
emissions because of increase in renewable relative to
Energy (BMWi) Germany. For the consumer price Index, I
Policy baseline. This showed a very positive impact of
used FRED (Federal Reserve Economic Data). And for the
renewables on both economic growth and technological cost
global temperature and carbon emissions data sets I used
after 2020. Taking in consideration the Policy or other
Our World in data and BP statistical review of world energy.
factors, the cost of renewable energy decreased after 2020
I used Gretlfor the stationarity check, plotting graphs and
and increased its share which later will result high economic
running regressions.
growth through 2050. The research concluded at the end that
in the long run the policy approach allowed flexibility to Using the data from 1985 to 2020, plotting the time
reduce CO2 emissions at lowest cost. series graph to check stationarity.

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ISSN No:-2456-2165
45

40

35

30
Renewshare

25

20

15

10

0
1985 1990 1995 2000 2005 2010 2015 2020

Fig. 10: Stationarity check of the data

This time series is showing exponential trend, which smaller, but as time passes it increases. This is consistent
follows a series has the same average growth from period to with a constant average growth rate; the percentage change
period. This figure plots data on annul share of electricity is roughly the same in each period. In practice, an
from renewables during the years 1985 to 2020. In the early exponential trend in a time series is captured by modeling
years we see that the change in annual growth is relatively the natural logarithm of the series as a linear trend.

𝒍𝒐𝒈𝑹𝒆𝒏𝒆𝒘𝒔𝒉𝒂𝒓𝒆𝒕 = 𝜷𝟎 + 𝜷𝟏 𝒍𝒐𝒈𝒐𝒊𝒍𝒑𝒓𝒊𝒄𝒆𝒔𝒕 + 𝜷𝟐 𝒍𝒐𝒈𝑪𝒐𝒂𝒍𝒑𝒓𝒊𝒄𝒆𝒔𝒕 + 𝜷𝟑 𝒍𝒐𝒈𝒈𝒂𝒔𝒑𝒓𝒊𝒄𝒆𝒔𝒕 + 𝜷𝟒 𝒍𝒐𝒈𝑻𝒐𝒕𝒂𝒍𝒆𝒍𝒆𝒕 + 𝒖𝒕

d_l_Renewshare d_l_Coalprice d_l_gasprice

0.25 0.2 0.5

0.2 0.4
0.15
0.3
0.15
0.2
0.1
0.1 0.1
0.05 0.05 0

0 -0.1
0
-0.2
-0.05
-0.3
-0.05
-0.1 -0.4
-0.15 -0.1 -0.5
1985 1993 2001 2009 2017 1985 1993 2001 2009 2017 1985 1993 2001 2009 2017

d_l_oilprice d_l_Electprod
0.6 0.06

0.4 0.04

0.2 0.02

0 0

-0.2 -0.02

-0.4 -0.04

-0.6 -0.06

-0.8 -0.08
1985 1993 2001 2009 2017 1985 1993 2001 2009 2017

Fig. 11: Taking the first difference of the data:

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Volume 7, Issue 10, October – 2022 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
Checking for the Unitroot: estimated value of (a - 1): -1.12773
To check the unitroot I used Gretl. I can check test statistic: tau_ct(1) = -6.35128
stationarity in my dataset by using Gretl. The first difference p-value 3.993e-05
of the natural log of each series in varlist is obtained and the 1st-order autocorrelation coeff. for e: 0.011
result stored in a new series with the prefix ld_. Thus ldiff x
y creates the new variables adf 1 d_l_Renewshare -ctt

ld_x = log(x) - log(x(-1)) Augmented Dickey-Fuller test for d_l_Renewshare

including one lag of (1-L)d_l_Renewshare
ld_y = log(y) - log(y(-1)) sample size 33
unit-root null hypothesis: a = 1
running the command ldiff𝑅𝑒𝑛𝑒𝑤𝑠ℎ𝑎𝑟𝑒𝑡 , I got the
new Variable ld_Renewshare test with constant
model: (1-L)y = b0 + (a-1)*y(-1) + ... + e
Now checking the UnitrootWith time, estimated value of (a - 1): -0.680218
test statistic: tau_c(1) = -2.76794
adf 0 d_l_Renewshare -ctt asymptotic p-value 3.164e-05
1st-order autocorrelation coeff. for e: 0.013
Dickey-Fuller test for d_l_Renewshare
sample size 34 with constant and trend
unit-root null hypothesis: a = 1 model: (1-L)y = b0 + b1*t + (a-1)*y(-1) + ... + e
estimated value of (a - 1): -0.954696
test with constant test statistic: tau_ct(1) = -3.4966
model: (1-L)y = b0 + (a-1)*y(-1) + e asymptotic p-value 6.123e-05
estimated value of (a - 1): -0.967554 1st-order autocorrelation coeff. for e: 0.012
test statistic: tau_c(1) = -5.46005
p-value 7.154e-05 Now we can clearly see the P-values ae very very
1st-order autocorrelation coeff. for e: -0.010 small at every level so we can say that our series is
stationary.
with constant and trend
model: (1-L)y = b0 + b1*t + (a-1)*y(-1) + e
VII. RESULTS AND DISCUSSION

Model 1: OLS, using observations 1986-2020 (T = 35)

Dependent variable: dl Renewables electricity

Coefficient Std. Error t-ratio p-value

const 0.0680770 0.0145641 4.674 <0.0001 ***
lgasprice −0.0591280 0.0833779 −0.7092 0.4837
dlCoalPrice 0.371872 0.267359 1.391 0.1745
dloilprice 0.0243972 0.0614978 0.3967 0.6944
lElectorod −0.556474 0.558681 −0.9960 0.3272

Mean dependent var 0.071746 S.D. dependent var 0.083537

Sum squared resid 0.208443 S.E. of regression 0.083355
R-squared 0.121477 Adjusted R-squared 0.004341
F(4, 30) 1.037056 P-value(F) 0.404462
Log-likelihood 39.99730 Akaike criterion −69.99461
Schwarz criterion −62.21787 Hannan-Quinn −67.31008
rho 0.020446 Durbin-Watson 1.954386

Now adding CO2 emissions, and see,

OLS, using observations 1986-2019 (T = 34)

Dependent variable: ldRenewshare

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Volume 7, Issue 10, October – 2022 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
Coefficient Std. Error t-ratio p-value
lCoalprice 0.335407 0.306157 1.096 0.2823
lgasprice 0.0382688 0.0998117 0.3834 0.7042
loilprice −0.00418498 0.0678447 −0.06168 0.9512
lElectprod 1.67987 0.797008 2.108 0.0438 **
lCO2emissions −2.65733 0.706571 −3.761 0.0008 ***

Mean dependent var 0.070561 S.D. dependent var 0.084494

Sum squared resid 0.241220 S.E. of regression 0.091203
Uncentered R-squared 0.404217 Centered R-squared -0.023870
F(5, 29) 3.935087 P-value(F) 0.007605
Log-likelihood 35.87903 Akaike criterion −61.75806
Schwarz criterion −54.12625 Hannan-Quinn −59.15539
rho 0.011997 Durbin-Watson 1.945059

Numerical values of the coefficients indicate the in the model, we have seen some level of significance in the
quantity of impact on dependent variable and its sign tell us results. Carbon emissions share significant results and
about the direction of relationship. T-statistics is used for negative relationship with Renewables. It means due to
deciding either impact that we have obtained is statistically increasing carbon emissions and global warming, we are
significant or not. And p-value can also be used for the same switching to renewable energy sources, as literature suggests
purpose. If p-values are less than 0.05 then, we can say that that fossil fuels are one the biggest reasons of carbon
the impact is statistically significant at 5% level of emissions. Clean energy sources are the most valuable,
confidence. Its mean we are 95% confident about the desired and efficient energy sources when it comes to fight
occurring of the impact value. The results show that there is against pollution and safety for our planet.Dong et al.
no significant relationship between prices of the fossil fuel (2018), the authors showed that renewables energy
(gas, coal, and oil) on the electricity production from decreases carbon emissions both in short term and long term
renewables. Which means increasing prices of the crude oil, and re-adoption leads to overall improvement in
gas and coal have no direct link with the increasing share of environment. Similarly, our results suggest the same results,
electricity production from the renewable energy sources. adoption of clean energy sources will lead to improvement
But when we added global warming and Carbon emissions of environment.

Forecasting:

Model 6: OLS, using observations 1986-2020 (T = 35)

Dependent variable: Renewableselectricity

Coefficient Std. Error t-ratio p-value

const −0.138365 0.248280 −0.5573 0.5811
Renewableselectricity_ 1.10370 0.0149425 73.86 <0.0001 ***
1

Mean dependent var 13.87895 S.D. dependent var 12.03351

Sum squared resid 29.60090 S.E. of regression 0.947099
R-squared 0.993988 Adjusted R-squared 0.993805
F(1, 33) 5455.739 P-value(F) 3.12e-38
Log-likelihood −46.73084 Akaike criterion 97.46169
Schwarz criterion 100.5724 Hannan-Quinn 98.53550
rho −0.386550 Durbin's h −2.295849
(0.248) (0.0149)
T = 35, R-squared = 0.994

(standard errors in parentheses)

Now we find the in sample forecasting first, we have = -0.0839 + 1.10*Renewableselectricity_1 (0.257)
to tell gretl using a subset of our data, particularly I will (0.0167)
exclude last year data from the sample, by clicking sample
and setting range to 2019, Gretl tells us full range and our T = 34, R-squared = 0.993
sample too, let re running the model, ^Renewableselectricity

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Volume 7, Issue 10, October – 2022 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
Now let’s see how much our model performs in Analysics For 95% confidence intervals, t(32, 0.025) =
forecasting the Renewable share in the next year, Going to 2.037

Obs Renewablesele prediction std. error 95% interval

ctricity
2020 44.8969 43.9609 0.950561 (42.0247, 45.8972)
0
60
95 percent interval
Renewshare
forecast
50

40

30

20

10

-10

-20
1985 1990 1995 2000 2005 2010 2015 2020

Fig. 12: difference between the forecasting and Actual data

The shaded area shows the 95% confidence interval, ^Renewshare = 5.96 + .78*Renewshare-1
which means that our predicted value are within the 95% (1.54) (0.825
confidence interval line.
T = 35, R-squared = 0.668
Forecasting for the next year,
Renewableshare 2021 = 5.96 + 0.78*Renewshare-1
by Restoring the full range and running the regression
5.96 + 0.72* 44.89 = 40.97%
model and we must add variable in the data for the future
forecasting, by just clicking add Observation,
55
Renewableselectricity
forecast
50 95 percent interval

45

40

35

30

25

20

15

10

0
1985 1990 1995 2000 2005 2010 2015 2020

Fig. 13: Forecasting for the next year

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Volume 7, Issue 10, October – 2022 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
VIII. CONCLUSION [8.] A S Dikalyuk, S E Kuratov. "Numerical Investigation
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