The Impact of Renewable Energy Consumption on Economic Growth: Evidence from Countries along the Belt and Road

Abstract

To mitigate the adverse effects of climate change, the structure of global energy consumption has changed, and renewable energy consumption has increased rapidly, which may have a new impact on sustainable economic development. Against this backdrop, this paper investigates the direct and indirect effects of renewable energy consumption on economic growth, utilizing panel data from 90 countries along the Belt and Road between 2000 and 2019. Employing Granger causality tests and mediating effect models, we detect a bidirectional causal relationship between renewable energy consumption and economic growth, further affirming the feedback hypothesis. Our findings show that renewable energy consumption directly contributes to economic growth. Additionally, we found that renewable energy consumption has an indirect influence on economic growth via its impact on gross capital formation and trade. Drawing on these findings, we offer practical recommendations for the Belt and Road countries to implement appropriate countermeasures.