Does renewable energy drive sustainable economic growth? multivariate panel data evidence for EU-28 countries.

By Dan Armeanu, Georgeta Vintila, Ș. Gherghina. 2017

192 citations recorded by the source corpus.

Energy is crucial to economic progress, but the contemporary worldwide population increase that demands greater energy generated from conventional exhaustible resources, an energy price upsurge, and environmental concerns, imperils sustainable economic growth. Nevertheless, switching to renewable energy produced from naturally replenished resources promotes energy security, likewise addressing issues such as global warming and climate change. This paper aims at exploring the influence and causal relation between renewable energy, both overall and by type, and sustainable economic growth of European Union (EU)-28 countries for the period of 2003–2014. We notice that the mean share of renewable energy in the gross final energy consumption is 15%, while the mean share of renewable energy in transport fuel consumption is 3%, which are below the thresholds of 20% and 10%, respectively, as set by the EU Directive 2009/28/EC. By estimating panel data fixed-effects regression models, the results provide support for a positive influence of renewable energy overall, as well as by type, namely biomass, hydropower, geothermal energy, wind power, and solar energy on gross domestic product per capita. However, biomass energy shows the highest influence on economic growth among the rest of renewable energy types. In fact, a 1% increase of the primary production of solid biofuels increases GDP per capita by 0.16%. Besides, cointegrating regressions set on panel fully modified and dynamic ordinary least squares regressions confirm the positive influence related to the primary production of renewable energies on economic growth. A 1% increase in primary production of renewable energies increases GDP per capita by 0.05%–0.06%. However, the results of Granger causality based on panel vector error correction model indicate both in short-run and long-run a unidirectional causal relationship running from sustainable economic growth to the primary production of renewable energies, being supported the conservation hypothesis.

Subfields: Economics and Econometrics, Environmental Engineering, Pollution

View Paper: https://www.semanticscholar.org/paper/c992d0fdb4bc55b003a7da77f748700f9cb95a0d

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Citations in the corpus

Renewable and Nonrenewable Energy Consumption, Economic Growth, and Emissions: International Evidence (2020, background): “Armeanu et al (2017) pointed out that RES are eco-friendly sources of energy or green energy.”
Renewable Energy Development as a Driver of Economic Growth: Evidence from Multivariate Panel Data Analysis (2019, background): “The causal relationship between economic growth and renewable energy development is also explained in the literature in the form of four testable hypotheses: growth hypothesis, conservation hypothesis, feedback hypothesis and neutrality hypothesis [37,38].”
The impact of renewable energy consumption and environmental sustainability on economic growth in Africa (2021, background): “For instance, Armeanu et al. (2017) believe that Africa’s long use of conventional exhaustible energy resources has raised serious environmental concerns while hampering sustainable economic growth.”