Influences of Financial Development and Energy Price on Renewable Energy: An Italian Case

Global climate change has created substantial difficulties in the areas of sustainability, development, and environmental conservation due to the widespread dependence on fossil fuels for energy production. Nevertheless, the promotion of renewable energy programs has the potential to significantly expedite endeavors aimed at tackling climate change. Thus, it is essential to conduct a thorough analysis that considers the financial aspects to fully understand the main hurdles that are preventing the advancement of renewable energy initiatives. Italy is a leading country in the worldwide deployment of renewable energy. The objective of this research is to assess the impact of financial growth, economic progress, and energy expenses on Italy’s adoption of renewable energy sources. By employing the Auto-Regressive Distributed Lag (ARDL) technique, we analyzed annual data spanning from 1990 to 2022. Findings revealed that a 1% increase in financial and economic development would boost renewable energy consumption in the long run by 0.29% and 0.48%, respectively. Instead, a 1% increase in energy prices might reduce consumption of renewable energy by 0.05% in the long run. This study’s primary significance lies in furnishing actionable strategies for Italy to augment green finance for renewable energy, fostering sustained social and economic progress. Moreover, the analytical insights gleaned from this research offer valuable insights for energy-importing nations worldwide.