Abstract
Economic growth and energy consumption are two main factors that play a vital role in any country's overall development. The researchers built and described different econometric models to evaluate the relationship between the two variables. In this research, we chose 15 emerging economy countries to examine the relationship between renewable energy consumption and economic growth. We applied the panel ARDL approach with PMG estimator which one of the best approaches to model long-term and short-term dynamics. Gross domestic product per capita and renewable energy consumption as a percent of total final energy consumption has a positive and significant coefficient when used as an independent variable in the long run. We also checked causality between the variables to test how the causal relationship occurs. We also found a causal relation from economic growth to renewable energy consumption, thus proving the conservation hypothesis. However, our outcome showed that the relationship is not statistically significant between renewable energy and economic growth in the short run. Finally, we pointed out few policy recommendations and future work directions based on our works at the end of this article.
Highlights
The source of energy is multidimensional, mainly depends on the geological location of that specific country, though, in the case of most countries, the primary source of energy is hydrocarbon-based fossil fuels
It is well known that using these fossil fuel energy sources like oil and natural gas has some externalities
The burning of fossil fuels causes the emission of Carbon Dioxide (CO2), which is a vital part of emitted Greenhouse Gas (GHG)
Summary
The source of energy is multidimensional, mainly depends on the geological location of that specific country, though, in the case of most countries, the primary source of energy is hydrocarbon-based fossil fuels. It is well known that using these fossil fuel energy sources like oil and natural gas has some externalities. This energy is non-renewable, as this fuel is extracted from the earth, so it is evident that the amount of this resource is decreasing day by day. Economic development depends on energy availability, so researchers are of great interest to find the relationship between economic growth and energy consumption. Whether or not the implementation of renewable energy-friendly policy becomes crucial for a country’s overall development depends on many conditions, including the country’s political and geographical situation, people’s mentality towards innovation and climate preservation, ease of access to raw materials, among others
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