BEYOND SUNLIGHT: HOW CO₂ EMISSIONS, COAL LOCK-IN, AND GLOBAL FINANCE SHAPE AUSTRALIA’S SOLAR ENERGY CONSUMPTION - AN ARDL ANALYSIS WITH ROBUSTNESS CHECKS
BEYOND SUNLIGHT: HOW CO₂ EMISSIONS, COAL LOCK-IN, AND GLOBAL FINANCE SHAPE AUSTRALIA’S SOLAR ENERGY CONSUMPTION - AN ARDL ANALYSIS WITH ROBUSTNESS CHECKS

Summary/Abstract: This study examines the determinants of solar energy adoption in Australia between 1991 and 2023 using an Autoregressive Distributed Lag (ARDL) model. The results reveal long-run equilibrium relationships and short-run adjustment mechanisms between solar deployment and the most pertinent economic, environmental, and financial factors. The results reveal some significant findings. First, financial globalization shows a strong negative long-run effect on Solar Energy Consumption. (SEC), suggesting that international capital flows have previously endorsed fossil fuel systems rather than renewable transitions. Second, coal consumption illustrates a strong negative effect, confirming path dependency challenges. Thirdly, while CO₂ emissions and GDP per capita have a positive effect on SEC, population growth has a negative relationship, suggesting that urbanization may precede the establishment of renewable infrastructure. The study’s policy implications underscore three strategic priorities: accelerating the transition away from coal and toward clean energy systems, transforming financial markets to encourage green investment, and channeling economic growth to build sustainable energy infrastructure. These are the proposals that have been advocated to address structural challenges for Australia’s energy transition while taking advantage of the strengths that have been built. The research presents empirical evidence for integrated policy strategies in orchestrating economic development and decarbonization goals within resource endowments.

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