Trade policy uncertainty and renewable energy transition in MENA: A quantile regression approach

Abstract

The energy transition in the MENA region remains complex due to its heavy reliance on fossil fuels. Using quantile-on-quantile regression on panel data (2001–2023) for 13 MENA countries, this study examines the effect of global trade policy uncertainty on renewable energy transition, alongside income, oil rent, innovation, carbon dioxide emissions, and trade openness. The results reveal heterogeneous effects across quantiles. A 1% rise in trade policy uncertainty increases renewable energy transition by 0.26% at the 0.1 quantile but decreases it by 0.05% at the 0.9 quantile, implying that such uncertainty stimulates transition only in economies already shifting toward renewables. Income negatively affects transition (–0.82% to –0.34%), confirming a resource curse, while trade openness heightens fossil fuel dependence (–0.52% to –1.23% across quantiles). Conversely, oil rent and trade openness jointly promote renewable adoption (0.38%–0.46%), and innovation enhances transition (0.02%–0.11%). However, higher carbon dioxide emissions impede renewable growth (–0.33% to –0.53%). Overall, renewable energy progress in the MENA region is uneven, with fossil fuel-centric economies lagging. The findings highlight that while trade policy uncertainty may catalyze early-stage transitions, excessive openness and dependence on fossil resources limit renewable expansion in advanced stages. Hence, trade policies should integrate decarbonization goals, channel windfall gains into renewable projects, promote innovation spillovers, and dismantle trade barriers to accelerate sustainable energy transformation across the region.