Trade and the Sustainable Energy Transition: Exploring the Impact of Trade on Total Factor Renewable Energy Efficiency

Improving total factor renewable energy efficiency (TFREE) is crucial for developed countries to achieve a sustainable energy transformation. International trade is an important source of technological progress and may significantly promote TFREE. However, previous studies have largely overlooked the impact of trade on TFREE. To this end, this study attempts to examine the impact of trade on TFREE of 28 major, developed countries. The main findings are as follows: trade significantly improves TFREE; in terms of the magnitude of the effect, export is greater than import, and trade in goods is greater than trade in services. Trade in most industries promotes TFREE, but trade in the ores and metals industry inhibits TFREE. Trade can only promote TFREE in countries with a high human capital level, high renewable energy infrastructure level, and high institutional quality level. The lag effect of trade on TFREE shows an inverted U shape over time; the nonlinear impact of trade on TFREE shows an N shape as TFREE increases. Biased technological progress and technological improvement effects are the main paths for trade to enhance TFREE. This paper can provide a reference for developed countries to formulate appropriate trade policies to improve TFREE.