The determinants of load capacity factor: Evidence from GCC countries
Abstract
In light of the global aim of reaching net-zero emissions, numerous studies have examined the leading causes of ecological decline, including carbon dioxide emissions, ecological footprints, and other greenhouse gases. These measures only consider the ecosystem’s demand side, ignoring its supply side. To fill this gap, this research investigates the Load Capacity Factor (LCF) determinants in four GCC economies from 1992 to 2021 using the Pooled Mean Group Autoregressive Distributed Lag (PMG-ARDL), Panel Vector Autoregression (PVAR)-Granger Causality test, and JKS test. The determinants considered in this study include Total Natural Resources Rents (RENT), Gross Domestic Product Per Capita (GDP), and Financial Globalization (FGLO). The PMG–ARDL’s result demonstrates that, in the short term, GDP, and RENT spur LCF, while FGLO is marginally beneficial. The JKS and PVAR-Granger Causality tests reveal a strong causal movement from RENT, GDP and FGLO to LCF, validating the PMG-ARDL findings. The study recommends that the GCC economies develop strategic ways to expand their economies while ensuring ecological quality. These strategies could entail the adoption of new technology, which will provide better ways of using fossils and adopting renewables, which can contribute to environmental progress.
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