Does human capital development impact nonrenewable energy use? Evidence from a developing economy

Abstract

ABSTRACT The dilemma surrounding the use of fossil fuels has led to demands for renewable energy and other clean energy sources. Renewable energy sources are not only unlimited but also have less negative impact on the environment and promote energy independence. The study uses the recent redesign of education in Ghana to assess how improved access to education can impact nonrenewable energy consumption. Using annual time-series data from 1976 to 2020, we estimate the long-term impact of human capital development on nonrenewable energy consumption in Ghana. Dynamic Ordinary Least Squares (DOLS), Fully Modified Ordinary Least Squares (FMOLS) and Canonical Cointegration Regression (CCR) were used to check the robustness. The results show that the development of human capital (returns on education) reduces the use of nonrenewable energy. In addition, other variables such as economic integration and energy prices also reduce nonrenewable energy consumption. However, rents from natural resources, urban population growth, and foreign direct investment (FDI) are having a positive impact on nonrenewable energy consumption. The study recommends that the government encourage research and development of clean and energy-saving technologies to ensure the availability and affordability of sustainable clean energy sources and reduce nonrenewable energy consumption in Ghana. In addition, the government should implement and strengthen policies that promote human capital development through education, as education has been shown to play an important role in reducing nonrenewable energy consumption.