Determinants of the renewable energy development in the EU countries. A 20-year perspective

The objective of the paper is to identify factors shaping energy policy in the EU countries in the middle of 1990s. This objective is achieved in two stages. During the first one, using PCA, we describe the distribution of energy sources in 26 EU countries in 1995. We find four main principal components distinguishing countries in terms of energy source consumption in 1995, and then, during the second stage, use them as potential determinants of renewable energy development. We also consider several factors related to energy security, environmental concerns, economy and politics. Applying two methods of variable selection, namely, the best subset regression and the lasso method, we demonstrate that the present (in 2014) share of RES in the energy mix significantly depends on the condition of the EU countries in the middle of 1990s. Our study reveals that the distribution of energy sources in 1995 is the main determinant of renewable energy development. Countries without their own fossil fuel sources are the ones with the greatest development of renewable energy. Other factors affecting RE development include: GDP per capita, the Shannon Wiener index (SWI) reflecting the concentration of energy supply, and the cost of the consumption of energy obtained from fossil fuels in relation to GDP.