Is there a Link between Renewable Energy Consumption and Economic Growth? A Dynamic Panel Investigation for the OECD Countries

This paper aims to investigate the relationship between renewable energy consumption and economic growth for 34 OECD countries, for the period 1990-2014. Using recent panel data techniques, outcomes show that increases in real GDP have a positive and statistically significant effect on renewable and non-renewable energy consumption (and vice-versa) only in the long run. In the short-run, the impacts differ according to the source of energy (energy coming from renewable or non-renewable sources). They show evidence for a bi-directional causality only between non-renewable energy consumption and GDP growth. The renewable sources are negatively influenced by an increase in the real GDP growth in the OECD sub-samples. Overall, the results validate the feed-back hypothesis in the case of non-renewable sources of energy in both, the short-run and the long-run. Regarding the renewable energy sources, findings validate the conservation hypothesis in the short-run, and the feed-back hypothesis in the long-run. As policy implications, governments should address growth and the expansion of renewable energy sector in a simultaneous way. This is possible by financing R & D investment in promising renewable technologies and related infrastructure networks in order to make renewable energy sources more competitive than fossil fuels, and also by promoting regional cooperation, development for clean-energy efficiency between countries.