Towards sustainable development in the European Union countries: Does economic complexity affect renewable and non-renewable energy consumption?

Energy insecurity and unsustainable development associated with traditional energy consumption are major challenges for nations. In this context, finding the different parameters that could influence energy use is essential for sustainable development strategies. Unquestionably, the economic structure of nations can influence energy usage; however, the limited literature on this topic delved into the impact of economic complexity on non-renewable energy usage. Hence, this study extends the literature and tests the effect of knowledge-based economic structure (economic complexity) on renewable and non-renewable energy consumption in 14 European Union countries from 1990 to 2017 using the methods robust against both heterogeneity and cross-sectional dependence. The long-run empirical results established that economic complexity increases renewable energy and decreases non-renewable energy use. Also, economic complexity Granger causes non-renewable energy while feedback effect exists between renewable energy and economic complexity. Based on the results, policies are discussed for promoting sustainable growth.