Renewable Energy and Economic Growth in “Next Eleven” Emerging Markets

The expansion of economic activity in both developed and developing nations has given rise to two significant worries: first, the rapid depletion of non-renewable energy sources due to their constant consumption; and second, the effects of global warming brought on by the emissions of greenhouse gases like carbon dioxide (CO2) and methane. Against this background, the 1997 Kyoto Protocol served as an avenue where attempts were made to cut the proportion of emissions caused by fossil fuels. The pact required the industrialized nations to cut greenhouse gas emissions, namely, CO2 emissions. The study examined the nexus between renewable energy and economic growth in “Next Eleven” emerging economies. It employed the dynamic panel model and Granger causality. Employing these tools, the findings revealed that causality only runs from economic growth to renewable energy, not vice versa. They also revealed that renewable energy consumption essentially causes a decline in economic growth for most of the countries in the group. The only exceptions were Mexico and Bangladesh, which experienced a short-run increase in economic growth due to renewable energy consumption. This chapter recommends that ambitious but realistic targets should be made when formulating renewable energy policies.