Role of policies in stimulating renewable energy in Arab countries

Abstract EN

Despite the abundance of literature on renewable energy (RE), studies about the role of policies in stimulating RE, especially for Arab countries, are still limited.

This study aims at examining the role of RE policies as a key determinant of RE investment in 11 Arab countries using panel data covering the period 2010-2019 to identify areas for policy intervention to stimulate RE investment in Arab countries.

The study uses RE share in total energy supply as a proxy for RE investments.

The analysis finds there is heterogeneity among Arab countries concerning their efforts toward reaching an enabling environment for RE investment, but all of them are exhibiting an improvement.

Results confirm the importance of policies, either using the RE policy index or its sub-indices in stimulating RE investment in Arab countries, as their variables are statistically significant.

But despite the significance of policies, Arab countries have low coefficients that reflect weakness in some sub-indices, particularly carbon pricing and greenhouse gas monitoring, incentives and regulatory support, attributes of financial and regulatory incentives, and counterparty risk.

To boost RE investment, Arab countries need to work vigorously on these pillars.