The asymmetric impact of renewable and non-renewable energy on total factor carbon productivity in 114 countries : do urbanization and income inequality matter?

A systematic study of the impact of renewable energy and non-renewable energy consumption on total factor carbon productivity could sever us to explore a lower-cost carbon-neutral energy transition path. To this end, total factor carbon productivity in 114 countries from 2000 to 2014 were measured by using the slack-based Global Malmquist-Luenberger index, and then, the asymmetric impact of renewable and non-renewable energy consumption on total factor carbon productivity with considering the roles of income inequality and urbanization were examined by a threshold effect regression. The results of the study show that: (i) Renewable energy consumption contributes to the increase in total factor carbon productivity. However, the mediation effects of income inequality and urbanization weaken this contribution. (ii) Non-renewable energy consumption inhibits the increase in total factor carbon productivity. The mediation effects of income inequality and urbanization increase this inhibiting effect. (iii) There is a nonlinear relationship between energy consumption and total factor carbon productivity in the high-income group, middle-income group, and low-income group. However, there is some heterogeneity between the different income groups. The mediating effect of income inequality is most significant in low-income countries, whereas the mediating effect of urbanization is most significant in middle-income countries. Finally, policy implications are put forward. The findings of this paper suggest that if a country wants to achieve environmental sustainability through energy restructuring, it needs to reduce income inequality and control the process of urbanization.