Renewable Energy Consumption and Economic Growth in Nigeria

Abstract:

The impact of renewable energy consumption on economic growth in Nigeria is aimed at establishing the relationship between renewable energy consumption and economic growth in Nigeria. The oil price volatility in the international oil market in the last decade has led to a substantial rise in the demand for renewable energy sources. Nevertheless, the provision of energy needed for growth and at the same time mitigating against its hazardous effects on the environment is a major world problem. The paper used secondary data from the World Bank data bank from 1990 to 2020 for its analysis. It used Toda-Yamamoto augmented granger causality test to test for the nature of the relationship between the two variables and Auto Regressive Distributed Lag (ARDL) bounds test to examine the impact of renewable energy consumption on economic growth. The study found a bi-directional relationship between the variables. The regression results also showed a significant positive impact of renewable energy consumption on economic growth. The work concluded that renewable energy consumption enhances economic growth in Nigeria. It therefore recommends that the government should encourage investments in the renewable energy sector by providing a conducive business environment and also create awareness on the importance of the use of renewable energy in the country.