Skip to main content

Impact of non-renewable and renewable energy consumption on economic growth: evidence from income and regional groups of countries

Environmental Science and Pollution Research volume 28, pages 38764–38773 (2021)Cite this article

Abstract

The motivation behind this study is to investigate the impact of non-renewable and renewable energy consumption on economic growth for a panel of 99 world countries with energy inclusive production function and then finding the empirical evidences for income and regional classification of world economies. To accomplish this purpose, the study has employed panel estimation techniques of dynamic and fully modified ordinary least square and fixed effects model after confirming Hausman test over the period of 1995–2017. For overall sample, the impact of non-renewable and renewable energy consumption on economic growth is found to be significantly positive while this relationship of energy-growth varies at income and regional classification. To incorporate the omitted variable biasness, capital and labor were included in the model. Thus, it is evident from the results that in the presence of non-renewable and renewable energy consumption, capital and labor have significant positive impact on economic growth. It is concluded that although energy consumption has a vital importance in boosting growth and development of the economies but heavily focusing on non-renewable energy cause environmental problems therefore, it is suggested to promote renewable energy sector for efficient and environment friendly use of energy.

This is a preview of subscription content, access via your institution.

Access options

Buy single article

Instant access to the full article PDF.

43,34 €

Price includes VAT (Finland)
Tax calculation will be finalised during checkout.

Fig. 1
Fig. 2
Fig. 3
Fig. 4

References

  • Aïssa MSB, Jebli MB, Youssef SB (2014) Output, renewable energy consumption and trade in Africa. Energy Policy 66:11–18

    Article  Google Scholar 

  • Akadiri SS, Bekun FV, Taheri E, Akadiri AC (2019) Carbon emissions, energy consumption and economic growth: a causality evidence. Int J Energy Tech Policy 15(2-3):320–336

    Article  Google Scholar 

  • Akinlo AE (2008) Energy consumption and economic growth: evidence from 11 Sub-Sahara African countries. Energy Econ 30(5):2391–2400

    Article  Google Scholar 

  • Al-mulali U, Fereidouni HG, Lee JY (2014) Electricity consumption from renewable and non-renewable sources and economic growth: evidence from Latin American countries. Renew. Sustain. Energy Rev 30:290–298

    Google Scholar 

  • Al-Molali U, Fereidouni HG, Lee JY (2014) Electricity consumption from renewable and non-renewable sources and economic growth: Evidence from Latin American countries. Renew Sustain Energy Rev 30:290–298

    Article  Google Scholar 

  • Alper A, Oguz O (2016) The role of renewable energy consumption in economic growth: evidence from asymmetric causality. Renew Sust Energ Rev 60:953–959

    Article  Google Scholar 

  • Apergis N, Payne JE (2009) Energy consumption and economic growth in Central America: evidence from a panel cointegration and error correction model. Energy Econ 31(2):211–216

    Article  Google Scholar 

  • Apergis N, Payne JE (2010) Renewable energy consumption and economic growth: evidence from a panel of OECD countries. Energy Policy 38(1):656–660

    Article  Google Scholar 

  • Asif M, Majid A, 2020. The role of institutions in energy policy and environmental protection. In Qudrat-Ullah H, Asif M (Eds). Dynamics of Energy, the Environment and Economy: A Sustainability Perspective. Springer Nature Switzerland.

  • Bhattacharya M, Paramati SR, Ozturk I, Bhattacharya S (2016) The effect of renewable energy consumption on economic growth: evidence from top 38 countries. Appl Energy 162:733–741

    Article  Google Scholar 

  • Caglar AE (2020) The importance of renewable energy consumption and FDI inflows in reducing environmental degradation: bootstrap ARDL bound test in selected 9 countries. J Clean Prod 264:121663

    Article  Google Scholar 

  • Chandran VGR, Sharma S, Madhavan K (2010) Electricity consumption–growth nexus: the case of Malaysia. Energy Policy 38(1):606–612

    Article  Google Scholar 

  • Charfeddine L, Al-Malk AY, Al Korbi K (2018) Is it possible to improve environmental quality without reducing economic growth: evidence from the Qatar economy. Renew Sust Energ Rev 82:25–39

    Article  Google Scholar 

  • Chen ST, Kuo HI, Chen CC (2007) The relationship between GDP and electricity consumption in 10 Asian countries. Energy Policy 35(4):2611–2621

    Article  Google Scholar 

  • Destek MA, Sinha A (2020) Renewable, non-renewable energy consumption, economic growth, trade openness and ecological footprint: evidence from organization for economic Co-operation and development countries. J Clean Prod 242:118537

    Article  Google Scholar 

  • Dogan E (2014) Energy consumption and economic growth: evidence from low-income countries in Sub-Saharan Africa. Int J Energy Econ Policy 4(2):154–162

    Google Scholar 

  • Dogan E (2015) The relationship between economic growth and electricity consumption from renewable and non-renewable sources: a study of Turkey. Renew Sust Energ Rev 52:534–546

    Article  Google Scholar 

  • Dong K, Sun R, Jiang H, Zeng X (2018) CO2 emissions, economic growth, and the environmental Kuznets curve in China: what roles can nuclear energy and renewable energy play? J Clean Prod 196:51–63

    Article  Google Scholar 

  • Hausman JA (1978) Specification tests in econometrics. Economet: J Economet Society 46(6):1251–1271

    Article  Google Scholar 

  • Huang BN, Hwang MJ, Yang CW (2008) Does more energy consumption bolster economic growth? An application of the nonlinear threshold regression model. Energy Policy 36(2):755–767

    Article  Google Scholar 

  • Im KS, Pesaran MH, Shin Y (2003) Testing for unit roots in heterogeneous panels. J Econ 115(1):53–74

    Article  Google Scholar 

  • International Renewable Energy Agency (2018). Renewable capacity statistics 2018. https://www.irena.org//media/Files/IRENA/Agency/Publication/2018/Mar/IRENA_RE_Capacity_Statistics_2018.pdf

  • IRENA, (2018). International Renewable Energy Agency. Renewable Capacity Statistics 2018. https://www.irena.org//media/Files/IRENA/Agency/Publication/2018/Mar/IRENA_RE_Capacity_Statistics_2018.pdf

  • Jebli MB, Youssef SB (2015) The environmental Kuznets curve, economic growth, renewable and non-renewable energy, and trade in Tunisia. Renew Sust Energ Rev 47:173–185

    Article  Google Scholar 

  • Jin T, Kim J (2018) Coal consumption and economic growth: panel cointegration and causality evidence from OECD and non-OECD countries. Sustainability 10(3):660

    Article  Google Scholar 

  • Kahia M, Aïssa MSB, Charfeddine L (2016) Impact of renewable and non- renewable energy consumption on economic growth: new evidence from the MENA net oil exporting countries (NOECs). Energy 116:102–115

    Article  Google Scholar 

  • Kahia M, Aïssa MSB, Lanouar C (2017) Renewable and non-renewable energy use economic growth nexus: the case of MENA net oil importing countries. Renew Sust Energ Rev 71:127–140

    Article  Google Scholar 

  • Kahsai MS, Nondo C, Schaeffer PV, Gebremedhin TG (2012) Income level and the energy consumption–GDP nexus: evidence from Sub-Saharan Africa. Energy Econ 34(3):739–746

    Article  Google Scholar 

  • Karanfil F, Li Y (2015) Electricity consumption and economic growth: exploring panel-specific differences. Energy Policy 82:264–277

    Article  Google Scholar 

  • Kebede E, Kagochi J, Jolly CM (2010) Energy consumption and economic development in Sub-Sahara Africa. Energy Econ 32(3):532–537

    Article  Google Scholar 

  • Koçak E, Şarkgüneşi A (2017) The renewable energy and economic growth nexus in Black Sea and Balkan countries. Energy Policy 100:51–57

    Article  Google Scholar 

  • Kraft J, Kraft A (1978) On the relationship between energy and GNP. J Energy Dev 3:401–403

    Google Scholar 

  • Lee CC, Chang CP (2007) Energy consumption and GDP revisited: a panel analysis of developed and developing countries. Energy Econ 29(6):1206–1223

    Article  Google Scholar 

  • Lee CC, Chang CP (2008) Energy consumption and economic growth in Asian economies: a more comprehensive analysis using panel data. Resour Energy Econ 30(1):50–65

    Article  Google Scholar 

  • Lee CC, Chang CP, Chen PF (2008) Energy-income causality in OECD countries revisited: the key role of capital stock. Energy Econ 30(5):2359–2373

    Article  Google Scholar 

  • Levin A, Lin CF, Chu CSJ (2002) Unit root tests in panel data: asymptotic and finite-sample properties. J Econ 108(1):1–24

    Article  Google Scholar 

  • Maji IK, Sulaiman C (2019) Renewable energy consumption and economic growth nexus: a fresh evidence from West Africa. Energy Rep 5:384–392

    Article  Google Scholar 

  • Narayan PK, Smyth R (2008) Energy consumption and real GDP in G7 countries: new evidence from panel cointegration with structural breaks. Energy Econ 30(5):2331–2341

    Article  Google Scholar 

  • Narayan PK, Narayan S, Popp S (2010) Does electricity consumption panel Granger cause GDP? A new global evidence. Appl Energy 87(10):3294–3298

    Article  Google Scholar 

  • Ocal O, Aslan A (2013) Renewable energy consumption–economic growth nexus in Turkey. Renew Sust Energ Rev 28:494–499

    Article  Google Scholar 

  • Omri A, Kahouli B (2014) Causal relationships between energy consumption, foreign direct investment and economic growth: Fresh evidence from dynamic simultaneous-equations models. Energy Policy 67:913–922

    Article  Google Scholar 

  • Pan H, Zhuang M, Geng Y, Wu F, Dong H (2019) Emergy-based ecological footprint analysis for a mega-city: the dynamic changes of Shanghai. J Clean Prod 210:552–562

    Article  Google Scholar 

  • Pao HT, Tsai CM (2010) CO2 emissions, energy consumption and economic growth in BRICS countries. Energy Policy 38(12):7850–7860

    Article  Google Scholar 

  • Paramati SR, Apergis N, Ummalla M (2018) Dynamics of renewable energy consumption and economic activities across the agriculture, industry, and service sectors: evidence in the perspective of sustainable development. Environ Sci Pollut Res 25(2):1375–1387

    CAS  Article  Google Scholar 

  • Paul S, Bhattacharya RN (2004) Causality between energy consumption and economic growth in India: a note on conflicting results. Energy Econ 26(6):977–983

    Article  Google Scholar 

  • Pesaran MH (2012) On the interpretation of panel unit root tests. Econ Lett 116(3):545–546

    Article  Google Scholar 

  • PWT, (2018). Penn World Table 9.0. 2018. Online available at: https://www.rug.nl/ggdc/productivity/pwt/

  • Rafindadi AA, Ozturk I (2017) Impacts of renewable energy consumption on the German economic growth: evidence from combined cointegration test. Renew Sust Energ Rev 75:1130–1141

    Article  Google Scholar 

  • Rahman MM, Velayutham E (2020) Renewable and non-renewable energy consumption-economic growth nexus: new evidence from South Asia. Renew Energy 147:399–408

    Article  Google Scholar 

  • Rashid A, Irum A, Malik IA, Ashraf A, Rongqiong L, Liu G, Ullah H, Ali MU, Yousaf B (2018) Ecological footprint of Rawalpindi; Pakistan’s first footprint analysis from urbanization perspective. J Clean Prod 170:362–368

    Article  Google Scholar 

  • RGSR, (2017). Renewables Global Status Report 2017. Online available at: http://www.ren21.net/wpcontent/uploads/2017/06/178399_GSR_2017_Full_Report_0621_Opt.pdf

  • Shahbaz M, Khan S, Tahir MI (2013) The dynamic links between energy consumption, economic growth, financial development and trade in China: fresh evidence from multivariate framework analysis. Energy Econ 40:8–21

    Article  Google Scholar 

  • Shahbaz M, Loganathan N, Zeshan M, Zaman K (2015) Does renewable energy consumption add in economic growth?An application of auto-regressive distributed lag model in Pakistan. Renew Sust Energ Rev 44:576–585

    Article  Google Scholar 

  • Soytas U, Sari R (2003) Energy consumption and GDP: causality relationship in G-7 countries and emerging markets. Energy Econ 25(1):33–37

    Article  Google Scholar 

  • Ulucak R, Bilgili F (2018) A reinvestigation of EKC model by ecological footprint measurement for high, middle and low income countries. J Clean Prod 188:144–157

    Article  Google Scholar 

  • WB (2019). World Bank Energy Progress Reports 2019 highlights. Online available at: https://trackingsdg7.esmap.org/downloads

  • WDI, (2018). World Development Indicators 2018. Online available at: https://databank.worldbank.org/source/world-development-indicators

  • Wolde-Rufael Y (2009) Energy consumption and economic growth: the experience of African countries revisited. Energy Econ 31(2):217–224

    Article  Google Scholar 

  • Yao S, Zhang S, Zhang X (2019) Renewable energy, carbon emission and economic growth: a revised environmental Kuznets Curve perspective. J Clean Prod 235:1338–1352

    Article  Google Scholar 

  • Zafar MW, Shahbaz M, Hou F, Sinha A (2019) From nonrenewable to renewable energy and its impact on economic growth: the role of research & development expenditures in Asia-Pacific Economic Cooperation countries. J Clean Prod 212:1166–1178

    Article  Google Scholar 

  • Zeb R, Salar L, Awan U, Zaman K, Shahbaz M (2014) Causal links between renewable energy, environmental degradation and economic growth in selected SAARC countries: progress towards green economy. Renew Energy 71:123–132

    Article  Google Scholar 

Download references

Availability of data

The data is freely available at World Development Indicators (WDI) published by World Bank

Funding

Self-funded.

Author information

Affiliations

  1. Department of Management Sciences, COMSATS University Islamabad, Abbottabad Campus, Abbottabad, Pakistan

    Muhammad Asif

  2. Department of Biotechnology, COMSATS University Islamabad, Abbottabad Campus, Abbottabad, Pakistan

    Sehrish Bashir & Saira Khan

Authors
  1. Muhammad Asif
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Sehrish Bashir
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Saira Khan
    View author publications

    You can also search for this author in PubMed Google Scholar

Contributions

MA: Main concept, methodology, software and formal analysis, review, and editing.

SB: Main concept, methodology, write-up, analysis, and data extraction.

SK: Review, editing, analysis, and statistical support.

Corresponding author

Correspondence to Muhammad Asif.

Ethics declarations

Ethical approval

Not applicable.

Consent to participate

All authors equally participated.

Consent to publish

All authors agree for the publication of manuscript.

Competing interests

The authors declare no competing interests

Additional information

Publisher’s note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Responsible Editor: Nicholas Apergis

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Asif, M., Bashir, S. & Khan, S. Impact of non-renewable and renewable energy consumption on economic growth: evidence from income and regional groups of countries. Environ Sci Pollut Res 28, 38764–38773 (2021). https://doi.org/10.1007/s11356-021-13448-x

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11356-021-13448-x

Keywords

  • Renewable energy
  • Non-renewable energy
  • Economic growth
  • Capital
  • Labor
  • SDGs