What is the global causal relationship between government governance, energy transition, and energy intensity? Empirical evidence from OECD countries

To combat climate change and achieve sustainable development on a global scale, reducing energy intensity has become essential. This study uses a variety of econometric models to examine the relationship between government governance, energy transition, and energy intensity using annual panel data from 37 OECD nations between 2002 and 2020. Methods such as the cointegration test, PMG estimation, and Granger causality are used to analyze the long-term and causal relationships between those targeted variables systematically. The results suggest that energy transition and government governance significantly inhibit energy intensity in the long run, though not that prominently in the short term. Secondly, there is a bidirectional causal relationship between energy transition and energy intensity, while the level of government governance has a unidirectional impact on energy transition and energy intensity. Besides, the heterogeneity test shows that energy transition always generates a long-term adverse effect on energy intensity, although varying degrees due to different types of countries. In conclusion, this study provides insightful scientific justifications and policy recommendations for advancing the energy transition and accomplishing sustainable development objectives.