Modeling the determinants of renewable energy consumption in Nigeria: Evidence from Autoregressive Distributed Lagged in error correction approach

Abstract

Different solutions have been designed to solve the climate change impacts. One recommended solution is to use renewable energy sources to power up economic activities. Renewable energy lowers the carbon footprint, generates no emissions and reduces harmful air pollutants. This research investigates the determinants of renewable energy consumption in Nigeria from 1960 to 2019 using the Parameterization Autoregressive Distributed Lagged in Error Correction approach. Nigeria is used as a case study because of its position and role in African and global economies. In the long-run, gross domestic product and financial development promote renewable energy consumption, and fossil fuel energy consumption harms renewable energy consumption. As gross domestic product increases by 1%, renewable energy consumption increases by 0.11%. A 1% increase in fossil fuel energy consumption decreases renewable energy consumption by 0.0008%. As financial development increases by 1%, renewable energy consumption increases by 0.026%. In the short-run, trade openness has a negative impact on renewable energy consumption. A 1% increase in trade openness decreases renewable energy consumption by 0.005%. Therefore, it is suggested that the Nigerian government continue to create policies that increase the Nigerian economy's productive capacity and regulate the importation of fossil fuel-related goods in favor of renewable energy products.