Climate risk and renewable energy development: the non-linear moderating role of institutional environment

Using a panel smooth transition regression (PSTR) model, this study investigated the nonlinear impacts of climate risk on renewable energy development (RED) under different regimes of institutional environment, covering the panel data of 85 countries over the period of 2000–2022. The results show that climate risk negatively affects RED, and it exhibits nonlinear transformation characteristics under different regimes. Climate risk has differential impacts on RED in different types of institutional environments; however, the negative impacts of climate risk on RED can be mitigated in a stable economic and financial environment. In addition, the negative effects of climate risk are more pronounced in low-income countries than in high-income countries. Our findings have important implications for addressing the challenges of climate change and achieving sustainable development.