Achieving energy transition in OECD economies: Discovering the moderating roles of environmental governance

The OECD countries are failing to fulfil their obligation towards the implementation of the objectives of SDG 7 and SDG 13. The failure of OECD countries is major constraint concerning global progress on curbing GHG emissions and mitigation of climatic changes as it provides rationale for developing countries to avoid their commitments. Therefore, the major focus of COP26 was to explore policy options for sustainable transition of energy from fossil fuel to clean renewables. This study analyzes the impact of innovation in environmental technology along with various policy regimes on energy transition in OECD countries from 2000 to 2019. The driving factors of energy transition in OECD countries are analyzed, under moderation of environmental governance regimes. This objective is realized by constructing an Energy Transition Index that accounts for the movement along the energy ladder. This index is developed using the Energy Ladder Hypothesis. Using two-step system-GMM and segregating the sample across level of emissions, the results show that the regional authority augments the energy transition, while enforecement of the climate change laws shows mixed results. Based on the study outcomes, a policy framework is recommended for attaining the SDG objectives by realigning the climate change adaptation and mitigation policies.