The Relationship Between Renewable Energy Consumption and Economic Growth in OECD Countries

This study aims to investigate the relationship between renewable energy consumption and economic growth for OECD countries, which increased their GDP by 70.22%, fossil fuel use by 5.18%, and renewable energy use (excluding hydro) by 400% in 2019 compared to 1990. While doing this, it analyzes real GDP, renewable energy consumption, real gross capital, and labor force for 20 OECD countries with annual data for the period 1990-2019. First of all, stationarity tests were used to determine the degree of stationarity of the series. Then, the cointegration relationship was tested with a heterogeneous panel cointegration test and a cointegration relationship was found. The coefficients of all variables were positive and statistically significant. In addition, according to the findings obtained from the error correction models, it has been obtained that there is unidirectional causality from renewable energy consumption to economic growth in both the short and long run. Therefore, the results show that the interdependent relationship between renewable energy consumption and economic growth supports the growth hypothesis. So, for OECD countries, any policy to reduce energy use will hurt economic growth.