Revisiting the determinants of renewable energy investment : new evidence from political and government ideology

This study examines the determinants of renewable energy investment, focusing on government orientation, nature of government system and government policy. Considering three possible ideologies of the ruling party including left, right and centre and two possible natures of the government system including presidential and parliamentary system, this research employs a panel data of 60 countries. This research is the first to examine the effect of nature of government system on renewable energy investment, using a sample from both developed and non-developed countries. The results confirm that both the left and central-orientated ruling party promote renewable energy investment more than a right-orientated government. Although the presidential system has greater ability to enact environmental policies quicker, the result suggests that the parliamentarian system has a better effect on promoting renewable energy investment. In an interesting result, the study finds that developed countries do not consider renewables to be an alternative to the conventional method of electricity production. In this case, developed countries are committed to the growth in renewable because they find investment in these renewables essential for the environment. Finally, the study establishes that the effectiveness of government support policies depend on the type of technology or the sub-group.