Does renewable energy development reduce energy import dependency in emerging economies? Evidence from CS-ARDL and panel causality approach

In today's era of global competition, high economic growth has become the focus of luxurious life worldwide. Unfortunately, the problem with the current economic growth is that it thrives at the expense of the natural environment and the natural ecosystems. Along with this, natural resources are limited and restricted to a few countries, which has made many countries dependent on energy imports. Moreover, energy imports are primarily responsible for environmental degradation. In this context, renewable energy sources are considered as substitutes for non-renewable resources to conserve the natural environment. Emerging market economies depend heavily on energy imports. By taking a panel setup of 16 emerging market economies from 1996 to 2019, this study investigates the impact of renewable energy consumption on energy imports in emerging economies. With the help of the CS-ARDL, FGLS, and Panel Causality modeling approaches, this study found that renewable energy development marginally substitutes energy imports. This study also found that the real effective exchange rate controls energy imports. Additionally, globalisation is also able to reduce energy import dependency to some extent. Finally, the results confirm that economic growth is highly responsible for increasing energy import demand. Potential policy suggestions are also discussed.