The effect of income on the energy mix: Are democracies more sustainable?

Abstract

This paper shows that the effect of income on the energy mix depends on the democracy level. We find that more democratic countries tend to depart from the hydroelectric power, oil, and geothermal sources of energy to rely on coal, natural gas, and modern renewable sources (nuclear, biomass, wind, and others). Less democratic countries tend to become more dependent on oil and natural gas with their own development. Moreover, the energy ladder transition from hydroelectric sources to natural gas appears to be escalated more quickly for less democratic countries. These transitions are thus more environmental friendly for more democratic countries than for less democratic ones. An extended multinomial fractional regression model is proposed to test and deal with the endogeneity of income.