Does Renewable Energy Matter for Economic Growth and Happiness?

Abstract

This paper investigates whether renewable energy influences economic growth and happiness. Using panel data from 25 European Union countries for the period 2012–2022, this study employs a panel model for estimation with fixed and random effects, and robust HAC standard errors. According to the research results, in general, the growing share of renewable energy in the energy mix has a positive impact on economic growth and the happiness of citizens. However, detailed research has shown that this effect depends on the type of energy; a significant positive impact was recorded only in solar share energy, wind share energy and economic growth. However, almost all types of renewable energy were included, i.e., biofuel, hydro, solar and other renewable share energy, and all had a significantly positive impact on the level of happiness. The exception was wind share energy, which showed a significant negative impact. The research findings of this paper provide empirical support for promoting renewable energy, which is positive both for economies and the happiness of citizens. It is one of the main aspects of sustainable economic growth.