Unintended Consequences of COVID-19 Public Policy Responses on Renewable Energy Power: Evidence from OECD Countries in the EU

Starting from 2020, governments around the world have continued to implement many types of public polices in response to the COVID-19 outbreaks. The dramatic public policies have substantially changed production and consumption activities, thereby temporarily lowing electricity use and greenhouse gas emissions. This study argues that the pandemic-induced public policies unintendedly slow down the transformation of renewable energy use in the EU, since the decline of greenhouse gas emissions led by the lockdowns helps the countries reduce the total emission temporarily. We employ a fixed-effect model to investigate the effects of different types of COVID-19 public policy responses on electricity production, consumption, and net import in 12 OECD countries in the EU, and mainly focus on the electricity production share from renewable energy source. Among several public policy responses, the stringent lockdown policies such as workplace closing, stay at home requirements, and restrictions on gathering size have negative and statistically significant impacts on electricity generation and consumption. Further, the countries with stringent lockdown policies are more likely to import electricity from other countries to mitigate the electricity shortage in their domestic markets. Importantly, we find the lockdown events have negative and statistically significant effects on the share of renewable energy use for the electricity production, while increase the share of fossil fuel use for the electricity production. In opposite, economic support policies such as income support, debt relief and economic stimulus programs can help reduce the share of fossil use for the electricity production and decrease the net import of electricity from other countries. Our results indicate that the public polices in response to the COVID-19 outbreaks have mixed effects on the transition to renewable energy power in the EU, suggesting that the current decline of greenhouse gas emissions comes from the reduction of electricity use led by the lockdown events instead of the adoption of renewable energy use and discourage the transformation of renewable energy source.