Corrupting Renewable Energy: A Cross-National Analysis of CO₂ Emissions

Many nations are investing heavily in renewable energy sources to support their development. However, there is debate among researchers concerning whether renewable energy leads to reductions in CO₂ emissions. Renewable energy sources should reduce CO₂ emissions, yet some researchers have observed a “displacement paradox,” in which renewables are used alongside fossil fuel energy instead of displacing it, and therefore CO₂ emissions are not substantially reduced. We argue that corruption may be partially responsible for the displacement paradox. We use two-way fixed effects regression from 1990 to 2015 to test how executive and public sector corruption moderates the effect of renewable energy consumption on CO₂ emissions per capita for 160 nations. We find support for our hypothesis, as the interaction terms reveal that corruption slows the beneficial effect of renewable energy consumption on CO₂ emissions. When nations control corruption within their borders, the positive impact of renewable energy is more than doubled.