Capturing policy decay and demand inertia in energy transition of MEDIT-5 countries through nonlinear modelling

Mediterranean countries are undergoing an energy transition due to the continued demand for non-renewable energy and the progressive decay of policy effectiveness. Together, these dynamics restrict the ability of the transition process to achieve sustainable energy systems in line with climate goals. This paper introduces a methodological innovation to address these issues by investigating how energy demand and taxation contribute to the renewable transition in five Mediterranean countries (MEDIT-5: Cyprus, France, Greece, Italy, and Malta). The study combines the Lorenz nonlinear system model with System Dynamics (SD) modelling to capture feedback loops, system inertia, and policy decay. This integrated approach enables the simulation of dynamic interactions among energy demand, policy interventions, and renewable energy adoption. The results suggest that energy taxes can facilitate the transition by incentivizing the use of renewable energy, yet the strong reliance on non-renewable energy remains a structural constraint. Evidence also suggests that policy effectiveness erodes over time and that transition inertia slows the pace of decarbonisation despite policy efforts. The findings underscore the need for adaptive, flexible, and long-term policy frameworks that can maintain momentum, mitigate inertia, and counteract policy decay. For the MEDIT-5 countries, managing the demand for non-renewables is crucial, as passive declines are unlikely to be sufficient to satisfy urgent climate requirements. This study contributes to the literature in environmental economics by proposing a new framework for estimating policy decay and highlighting how policy-driven reductions in non-renewable demand can accelerate renewable energy transitions. The extended model with socio-economic factors confirms the robustness of policy-driven transition dynamics.