Nations worldwide have recently been considering sustainable development and increasing the consumption of renewable energy sources, such as hydropower, solar PV, wind power, and geothermal power. High and unpredictable vitality costs and geopolitical discussion encompassing the consumption of non-renewable energy sources will boost the growth and market openness of sustainable power sources by different governments. This study evaluates the potential impact of sustainable and non-sustainable energy sources on economic growth across the nations.
This study applied heterogeneous panel approaches and established the elasticities of long-run output with the consumption of renewable (non-renewable) energy, labor, and capital for major renewable energy-consuming countries, following RECAI. This empirical analysis shows that the use of renewable energy has a positive and considerable effect on economic growth for Ukraine, Sweden, Slovenia, Poland, Peru, the Netherlands, Mexico, Korea Republic, Kenya, Japan, Ireland, Greece, Germany, Finland, Denmark, the Czech Republic, China, Chile, Bulgaria, Brazil, Austria, and Australia. The majority of which have already moved toward renewable energy sources. For instance, the Renewable Energy Act
encourages the implementation of renewable energy use in China13 regarding its 2005 and 2009 amendments. The National Energy Agency14 and National Development and Regulation Commission’ [1] is responsible at the national, regional, and local levels for setting goals.
The Australian government also supported renewable energy projects schemes such as large-scale (Hydro energy and Wind energy) and small-large-scale renewable energy (Solar) projects following amendments on June 23, 2015. They expected that renewable energy elasticity production would be 23.5% by 2020. The Japanese government has an encouraging variety of renewable sources, such as nuclear, hydropower, geothermal, and other (PV, Wind, and MSW) from 366.4, 95.4, 3.2, and 10.2 in 2010, respectively, and they are projected to increase to 437.4, 85.6, 3.3, and 31.2 by 2030, respectively. Japan is expected to have 22% to 24% renewable electricity by 2020. Ireland’s economic goal is to produce 20% renewable electricity by 2020, while Sweden aims to have at least 50% renewable power by 2020.
Brazil’s government signed an agreement with the US government in June 2015 to expand renewable energy use to 20% by 2030 [74]. These 22 countries have started to shift from non-renewable energy use to renewable energy in long-run. For many of these nations, the deployment of renewable sources is creating employments in the economy. For example, Japan will be creating a trillion JPY market and 110 thousand employment opportunities in the solar industry by 2020 [74].
Secondly, renewable energy use has a significant and negative effect on economic growth in Canada (-2.408), France (-0.356), India (-1.927), Norway (-0.753), Spain (-0.365), Turkey (-0.775) and the United Kingdom (-0.158). It highlights the characteristics of a few nations in the energy mix, which can lead to a slow development with an adverse impact on economic growth. For instance, Canada is rich in natural gas and crude oil, and 91% of
13www.npc.gov.cn
14www.en.ndrc.gov.cn
energy products have been exported to the US.15 The fastest-growing sources of renewable energy, such as wind and solar are producing only 3% of renewable energy. The Indian energy sector is mainly based on coal (69%), with 12% hydropower and 5% non-hydro renewables. Based on the allocation of funding, renewable energy sources are in the prosperous states of India; that is, Rajasthan, Gujarat, and Tamil Nadu. The Turkish Government is implementing the National Renewable Energy Action Plan (NREAP) to achieve 30% of its total renewable energy installed capacity by 2023. We examined seven nations' energy-mix and observed their present scenario of renewable energy sources;
therefore, we advise that non-renewable energy sources should be substituted with renewable energy sources for better economic development. Such seven countries must pursue a steady and incremental deployment process.
Thirdly, for nine economies such as Belgium, Italy, Israel, Morocco, Portugal, Romania, South Africa, Thailand, and the United States, we find that the consumption of renewable energy has an insignificant impact on economic growth. One conceivable clarification regarding these nine nations is that they have not had the option of realizing the production of renewable electricity sources for achieving economic output. Hence, the policy advisors of the respective countries will focus on funding renewable energy sources;
consequently, renewable energy sources can be used to raise demand for energy from various economic activities. For example, in Belgium, renewable energy production is 2% in 2005 and is expected to have 13% of electricity from renewable sources by 2020. To reach the target, the country has to allocate more capital for development of renewable energy efficiency and encourage the use of renewable energy consumption by providing different incentives and public private partnership investment, subsidies. Israel has largely relied on
15Percentage of Canadian production
the hydrocarbon-led energy sector [75]16 and reports 33% of diesel and natural gas electricity production and 6% of coal. The Israel nation needs to adopt the use energy renewable energy consumption by reducing the use of non-renewable energy resources and ensure sustainable development by lowering the carbon emissions. Recently, these nine nations relied heavily on foreign trade. Thus, low-carbon emissions energy-mix will not have a considerable and unfavorable impact on economic growth. To maintain the stability of economic growth and sustainability development, the countries has to encourage the use of renewable energy resource by increasing energy efficiency, furthermore, which will ensure stable economic growth and sustainability growth. The consumption of renewable energy sources has grown for the vast majority of nations in the last two decades. The results of the implementation of renewable energy are unique across nations due to many factors, as addressed in various reports by international bodies. All the nations have to encourage the use of renewable energy consumption as well as allocate more funding to renewable energy projects, it’s not only reduced carbon emissions but also ensure sustainable growth. Therefore, the policy makers and governments need to reframe the new policies, which will help to ensure future aspects.
Lastly, previous studies have shown positive relationship between renewable energy consumption and economic growth. Therefore, our study also looked into whether those countries are constantly encouraging renewable energy consumption by increasing capital.
Interestingly, our study found that only 22 countries have shown positive relationship between renewable energy consumption and economic growth. A study by Bhattacharya et al.
(2016) also examined same group of countries and variables but found that renewable energy consumption has a positive impact on economic growth for 23 countries. Our study confirmed that renewable energy consumption has a negative impact on economic growth in 9 countries while Bhattacharya et al. (2016) established negative impact only for 4 countries.
16(IEC) Israel Electric Corporation
This study finds that the relationship between renewable energy and economic growth is dynamic. Further, it shows that additional investments will improve renewable energy production (consumption) and will have impact on economic growth.
All countries are moved towards a low carbon emission and planning to develop sustainable economy. Therefore, we need an essential transformation of economic structure and energy transformation. The developed economic, environmental policies and other policies may play a significant role in fostering and steering the transformation but governments will need to ensure that policies are implemented as well as monitored effectively. Environmental policies are essential for economic development and sustainable economy. Therefore, the strength of environmental and energy policies to achieve their objective based on the country process leading to policy adoption. Here, every country has a separate policy which may be encourage their energy sector and may not. To develop renewable energy sector, we need financial support for development of green technologies, after that we need to start applying those technologies into industries and households. To use renewable energy technology not only reduces carbon emissions and also strengthens energy efficiency. Last but not least, energy policies may have different effects due to different energy policy stringency, development stage, governmental institutions, market freedom etc.
in different countries.
This work highlights a few shortcomings in describing the process of growth, which considers renewables as a source of energy. Whereas the implementation of renewables policies is based on several factors within and across nations, it is important to develop a long-term plan to address the capacity, costs, regulatory barriers, infrastructure, and institutional structure of any nation. For instance, the combination of renewables and grids presents a significant challenge as grids are typically used to supply electricity generated by fossil fuel. This situation was highlighted by Desideri et al. [76]. There are considerable
insights like the problem of and the best way to increase renewable investment [77]. This study does not consider these issues, which may have direct as well as indirect effects on economic growth in the process of renewable deployment. Developing an investment climate, improving human resources, and removing all financial and political obstacles are significant steps toward the deployment of renewable sources. For example, this process has also included in the majority of OECD nations, as well as other nations. Financial considerations, investment subsidies, solar cells sales tax exemptions, feed-in tariffs, tax or credit incentives, green certificate trading, and establishing quota are significant tools for continuous deployment. Power planners, international cooperation organizations, government utilities on energy policy, and related organizations need to work together to enforce renewable energy deployment policies.
Funding
Fundamental Research Funds for the Central Universities [grant number 63192807]
Tianjin Philosophy and Social Sciences Planning Project [grant number TJGL18-003]
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