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The significance of renewable energy use for economic output and environmental protection: evidence from the Next 11 developing economies

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Abstract

Increasing economic activities in developing economies raise demand for energy mainly sourced from conventional sources. The consumption of more conventional energy will have a significant negative impact on the environment. Therefore, attention of policy makers has recently shifted towards the promotion of renewable energy generation and uses across economic activities to ensure low carbon economy. Given the recent scenario, in this paper, we aim to examine the role of renewable energy consumption on the economic output and CO2 emissions of the next fastest developing economies of the world. The study employs several robust panel econometric models by using annual data from 1990 to 2012. Empirical findings confirm the significant long-run association among the variables. Similarly, results show that renewable energy consumption positively contributes to economic output and has an adverse effect on CO2 emissions. Given our findings, we suggest policy makers of those economies to initiate further effective policies to promote more renewable energy generation and uses across economic activities to ensure sustainable economic development.

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Notes

  1. The FMOLS model has been widely used by several authors to examine the long-run elasticities of the variables (e.g., Alam et al. 2015; Bhattacharya et al. 2016).

  2. The previous literature (e.g., Alam and Paramati 2015) used the conventional approach (i.e., VECM technique) to identify the causal relationship among the variables. This model suffers from numerous disadvantages, and as a result of this, the recent literature (e.g., Alam and Paramati 2016; Paramati et al. 2017a,b) has started to employ the heterogeneous panel non-causality test to explore the direction of causality between the variables.

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Authors and Affiliations

  1. International Institute for Financial Studies, Jiangxi University of Finance and Economics, Nanchang, China

    Sudharshan Reddy Paramati

  2. Centre for Economics and Finance, Administrative Staff College of India, Hyderabad, India

    Avik Sinha

  3. Department of Economics, Abdullah Gul University, Kayseri, Turkey

    Eyup Dogan

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  1. Sudharshan Reddy Paramati
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  2. Avik Sinha
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  3. Eyup Dogan
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Correspondence to Sudharshan Reddy Paramati.

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Paramati, S.R., Sinha, A. & Dogan, E. The significance of renewable energy use for economic output and environmental protection: evidence from the Next 11 developing economies. Environ Sci Pollut Res 24, 13546–13560 (2017). https://doi.org/10.1007/s11356-017-8985-6

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