Mitigating energy uncertainty in emerging economies: the role of renewable energy generation and governance

Energy-related uncertainty poses a major challenge due to its negative impact on economic stability and investment decisions, thereby possibly hindering sustainable long-run development. Addressing this, the current study examines whether renewable energy generation and better governance can equally lessen energy uncertainty. In examining the above nexus, this study controls for economic globalisation, economic growth, geopolitical risk, and domestic bank credit in the energy uncertainty function. This study uses a balanced sample panel of eight emerging economies spanning 1996–2021. The Pooled Mean Group Auto Regressive Distributed Lag (PMG-ARDL) technique is used for obtaining the long-run coefficients. Moreover, both Feasible Generalised Least Squares (FGLS) and Arellano–Bond panel dynamic estimation methods are employed as robust techniques. Findings show that renewable energy generation and effective governance reduce energy uncertainty in emerging economies, though better governance has a stronger impact. Additionally, robust analysis finds that geothermal and biomass have a substantially greater contribution compared to solar and wind energy sources in mitigating the energy uncertainty of emerging economies. The results also illustrate that economic growth and geopolitical risk significantly amplify energy uncertainty, while economic globalisation and domestic bank credit lessen energy uncertainty.