State Regulation of Energy Transition and Economic Development

Government regulation with respect to the reduction of greenhouse gas emissions has been actively developing in the world in the past three decades, mainly in form of carbon taxation and emission trading systems with a carbon price as their basic representation. With more than 50 countries already applying such regulation and many others looking in that direction due to their obligations under the Paris Agreement, the question of suitable carbon price is still open. The aim of this paper is to form groups of countries according to the chosen economic, environmental and regulation factors to facilitate decision-making regarding the formation of energy transition regulation policies. Clustering analysis was carried out to identify countries with similar features in the research area. Five clusters with average carbon price ranging from USD 5.3 to 49.2 per t were obtained. The hypothesis of the study regarding direct connection between the level of economic development and state regulation was partially confirmed. It was revealed that most of the countries with active carbon regulation depend on the external supply of fossil energy sources. The results of the clustering could serve as a benchmark for the countries with similar indicators.