Comparative analysis of the key drivers of the transition to renewable energy in Tunisia and Morocco using the threshold effect of economic policy uncertainty

The transition to renewable energies is a pressing global issue, particularly for economies like Morocco and Tunisia, which rely on imports to meet nearly all their energy needs. This transition is, therefore, an essential strategy for both countries, not only to combat climate change but also to curtail dependence on fossil fuel imports. In this context, the current study aims to examine financial development (FD), technological innovation (TI), foreign direct investment (FDI), and gross domestic product (GDP) as key determinants of renewable energy consumption (REC) in Tunisia and Morocco. The study spans 43 years (1980–2022) and employs the threshold regression model. Additionally, the impact of the threshold level of economic policy uncertainty (EPU) on these determinants is assessed. The outcomes indicate that, in Morocco, in the first regime (EPU ≤ 0.0337), only GDP significantly and positively influences REC. In the second regime (EPU > 0.0337), GDP, LFDI, and LFD all significantly and positively affect REC. In Tunisia, under the first regime (EPU ≤ 0.2595), GDP and LFD positively affect REC, whereas LTI has a negative effect. In the second regime (EPU > 0.2595), the effects of all explanatory variables become statistically insignificant. These findings reveal a significant threshold effect of EPU, formally validated by the Hansen [32] linearity test (F = 17.669*** for Morocco,F = 16.434** for Tunisia). This paper may assist policymakers and investors in understanding the main factors shaping the transition to clean energies in Morocco and Tunisia, and in proposing effective strategies to accelerate it.