Electricity Consumption, GDP and Renewables

Abstract

This chapter analyzes the relationship between renewable and non-renewable electricity consumption and economic growth for 130 countries categorized into four groups based upon the World Bank income classification (high, upper middle, lower middle, and low income). The main motivation for this study is to find out whether the causality relationships change depending on the income level of countries. For this purpose panel causality tests are used. Electricity consumption data is disaggregated into renewable and non-renewable sources with the aim of providing more information for policy makers to use in designing energy policies in the context of environmental and sustainable development. The results of the study show that the conservation hypothesis is supported for high, upper-middle and lower-middle income groups, while the neutrality hypothesis is supported for low-income countries. The main finding of this chapter is that the causality relationship between electricity consumption and economic growth disappears for lower-income levels. We can conclude that implementing green economy policies in the context of sustainable development is a reasonable choice for developing countries, provided that it is supported by developed nations.