Are renewable sources displacing fossil fuels in electricity generation? : A panel data investigation on global data

Sammanfattning: As the consequences of climate change is increasing the need of replacing fossil fuels with renewable energy globally is becoming more urgent. A central question that has been questioned in the literature is that if the world is on track on a transition away from fossil fuels or if we are only adding renewable energy to the energy mix in a world that continues to grow and consume more energy. Because of the above mentioned, this thesis aims to investigate if the increased generation of electricity from renewable sources are displacing the generation of electricity from fossil fuels. This is tested using a time and country fixed effects model including 176 countries with yearly observations from 2000 to 2020. The result from the regression showed that one additional kWh electricity generated from renewable sources has not statistically managed to displace one kWh of electricity generated from fossil fuels, net of controls. Previous studies using a similar methodology but on older time frames has shown result were almost no displacement has occurred when renewable sources have been added. The result from this thesis should not be interpreted as that the transition is not going to happen since it might be that the global initiatives taken around the globe to make the transition happenis not get visible in the numbers used in thesis, but the result does on the other hand indicate that several economic, political, and social factors has made the transition to renewables difficult, and that we should not assume that renewable energy will replace fossil fuels for electricity generation without policy measures that supports the transition.