Strategic Management of the Renewable Energy Transition: The Role of Public Debt, Environmental Taxes, and Renewable Energy R&D Expenditures

ABSTRACT As the world navigates intertwined environmental and economic crises, the challenge of sustainable energy provision has grown more pressing than ever. These interconnected imperatives emphasize the need for sustainable energy solutions that protect the environment. Therefore, the renewable energy transition is strategically important for achieving environmental, economic, and sustainable development goals. Because fossil fuels exacerbate the ecological crisis, renewable energy sources are well‐suited to address these problems. However, the transition to renewable energy involves high costs and demands the active implementation of public policies. Public debt plays an important role in this area and has reached historically high levels globally. Therefore, the ultimate effects of public debt will be decisive for energy transformation, despite limited studies on those effects. This study examined the relationship between public debt and renewable energy transition in 12 selected developed countries, using annual data from 1994 to 2021 and panel time‐series analysis techniques. The results show that high public debt can hinder the renewable energy transition, while moderate public debt can be advantageous in some countries. While energy‐based environmental taxes support the transition to renewable energy, public R&D expenditures for renewable energy are still below their potential to produce beneficial effects. Additionally, evidence indicates that sustainable development efforts are a key determinant of and driving force behind the renewable energy transition.