Abstract:

This study examines whether the renewable energy transition in the EU-27 has proceeded as a common process or as a “two-speed” transitionUsing harmonized EUROSTAT energy data for a balanced panel of 27 EU Member States for the period 2004–2024 (567 country-year observations), we analyze whether there has been convergence in the shares of renewable energy in gross final energy consumption (RES) by employing both σ-convergence and β-convergence methods. By using σ-convergence, we calculate the cross-sectional standard deviation of the natural logarithm of the RES indicator, and test the time trend for heterogeneity by applying the HAC-robust regression analysis. In addition, we employ β-convergence analysis using an endpoint cross-sectional regression approach, and fixed effects panel model with country and time dummies, and country-clustered standard errors. The analysis in the paper is based on the fact that the RES indicator is a variable in the range of (0,1), and that the SHARES methodology has been updated in 2021. For this reason, we perform robustness checks by applying the logit transformation, and by estimating the model for the 2004–2020 and 2021–2024 periods. Our findings provide solid evidence for the dynamic of the EU renewable energy transition in terms of both its level and convergence aspects. On one hand, we find that there has been considerable progress in the promotion of renewable energy production and consumption within EU territory. The mean value of RES was 12.322% in 2004 and reached 27.909% in 2024, while the median value was 8.345% in 2004 and 23.229% in 2024. On the other hand, our empirical analysis reveals that there has been a high degree of relative convergence in EU27. The dispersion of the RES indicator has fallen from 1.2567 in 2004 to 0.3997 in 2024, indicating that there was a strong relative convergence process towards EU renewable energy targets, and that the EU renewable transition was a convergent process. The annual adjustment rate for β-convergence was found to be around 7–8%, with a half-life convergence of approximately nine years. On the other hand, there has been only a small reduction in the distance between the most and the least developed countries in terms of renewable energy, as the gap between the minimum and the maximum value of the RES indicator increased from 38.325% points in 2004 to 48.510% points in 2024. Our results confirm the existence of an incompleted convergence of EU renewable energy transition, which is reflected by the incomplete catch-up process in absolute terms, even after more than two decades of EU renewable energy policies. Finally, the extension of the dataset to 2024 reinforces the findings of the paper concerning the existence of a two-speed renewable energy transition process at EU level, characterized by a high degree of relative convergence in the RES indicator, while retaining the existing substantial disparities between the EU Member States in their respective levels of renewable energy production and consumption in absolute terms.