Institutional Quality, Trade Openness, and Renewable Energy Consumption in the GCC Countries

Renewable energy (REN) is a critical factor in addressing environmental issues. Identifying the key drivers of REN is, therefore, crucial for the formulation of appropriate policies to enhance environmental sustainability. This study examines how institutional quality and trade openness influence REN consumption in the Gulf Cooperation Council (GCC) countries over the period 1996–2020. Using the pooled mean group (PMG) technique, the findings show that institutional quality and trade openness have a negative significant influence on REN demand in the long run. Also, while foreign direct investment (FDI) and urbanization significantly decrease the share of REN, population growth in the GCC countries boosts REN demand. We recommend that institutional frameworks in the GCC countries be strengthened to reverse the declining influence of institutional quality on REN development. Likewise, policies should be enacted to ensure that trade in the region includes the transfer of renewable-related technologies and that investment inflows are channeled toward green initiatives.