Spatial interdependencies and the role of PESTLE framework in shaping OECD energy transition pathways

The present study explores spatial spillover effects of PESTLE (Political, economic, social, technological, legal, and environmental) factors on energy transition (ET) across 31 OECD economies from 1996 to 2021. The inverse distance weight matrix (IDWM) is used for advance spatial econometrics analysis. Global Moran’s I and Local Moran’s tests confirm the presence of spatial autocorrelation. The empirical findings of a Spatial Durbin Model reveal that government policies (GP), financial inclusion (FI), human development (HD) and green technological innovations (GTI) create a positive spillover effect and accelerate the pace of energy transition (ET) in home and neighbouring economies. In contrast, ecological footprint (EF) and inflation produce a negative spillover effect and a decline in ET. The study’s insights, aligned with international accords and Sustainable Development Goals (SDGs) 7 and 13, offer vital directions to decision-makers to strengthen the energy transition process and the challenges to a sustainable growth.