Enhancing energy efficiency in OECD economies: The role of eco-friendly technology, financial development, and clean energy investment

The World Bank acknowledged that energy efficiency is a key factor for advancing multiple Sustainable Development Goals, highlighting its role in fostering sustainable economic growth, reducing environmental pressures, and promoting social well-being. During the recent decade, the identification of factor influencing energy efficiency has gained significant attention from policymakers. The present research extends the scope of the ongoing debates by incorporating additional prospective factors that may influence energy efficiency in Organisation for Economic Co-operation and Development (OECD) economies. Accordingly, this study aims to examine how eco-friendly technology, financial development, clean energy investment, energy price, and human capital affect energy efficiency for 25 OECD countries during the period of 1990–2020. To achieve these objectives, this study addresses critical research gaps by integrating ecological and technological innovations, a refined human capital index, and utilizing a comprehensive measure of energy efficiency. In addition to this, the study employs advanced econometric techniques, including Cross-Sectionally Augmented Autoregressive Distributed Lag (CS-ARDL), Fully Modified Ordinary Least Square (FMOLS), and Dynamic Ordinary Least Square (DOLS), to ensure robust and reliable analysis. The findings reveal that all variables exert a positive influence on energy efficiency, while energy prices exhibit negative relationship. Hence, the study recommends fostering the development of new environmental technologies and increasing investment in the clean energy sector to strengthen energy efficiency. Additionally, it underscores that eco-friendly technology, sustainable financial development, and clean energy investment are critical components of improved energy efficiency. Furthermore, policymakers are encouraged to reassess existing energy policies with the aim of reducing energy prices to increasing energy efficiency and supporting both sustainable development goals and economic growth.