Renewable energy: Moderated, moderating or mediating?

•Examines renewable energy as a moderated, moderating, and mediating variable in affecting carbon emissions.•Introduces two base moderated mediation models to investigate these three functions of renewable energy.•Introduces multiple wavelet coherence as a robustness test for moderated mediation analysis. Previous research has extensively explored the direct impact of renewable energy on carbon emissions. This paper investigates three points against this backdrop. The first point is whether renewable energy operates as a moderated, moderating, or mediating variable in influencing the direct or indirect effects of growth on carbon emissions. The second point is which models should be used to estimate these three functions of renewable energy. The third point is whether these three functions should be estimated using aggregate or disaggregate data. The study draws two major findings. First, the three functions of renewable energy in influencing the impact of growth on carbon emissions should be investigated using moderated mediation models in which nonrenewable energy serves as a moderating or mediating variable and financial development serves as a moderating variable. Second, these models should be estimated using both aggregate and disaggregate proxies for renewable energy, economic growth, and financial development. Based on its empirical findings, the study presents pertinent policy suggestions for assessing the three roles of renewable energy.