Dynamics of renewable energy consumption and economic activities across the agriculture, industry, and service sectors: evidence in the perspective of sustainable development

Abstract

This study aims to examine the impact of renewable and non-renewable energy consumption on the agriculture, industry, services, and overall economic activities (GDP) across a panel of G20 nations. The study makes use of annual data from 1980 to 2012 on 17 countries of the G20. To achieve the study objectives, we apply several robust panel econometric models which account for cross-sectional dependence and heterogeneity in the analysis. The empirical findings confirm the significant long-run equilibrium relationship among the variables. The long-run elasticities indicate that both renewable and non-renewable energy consumptions have significant positive effect on the economic activities across the sectors and also on the overall economic output. These results also imply that the impact is more from renewable energy on economic activities than that of non-renewable energy. Given that, our results offer significant policy implications. We suggest that the policy makers should aim to initiate effective policies to turn domestic and foreign investments into renewable energy projects. This eventually ensures low carbon emissions and sustainable economic development across the G20 nations.

Keywords: Cross-sectional dependence; G20; Renewable energy consumption; Sectoral economic activities; Sustainable economic growth.