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Exploring the Nonlinear Relationship between Renewable Energy Consumption and Economic Growth in the Context of Global Climate Change

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  • Yuting Feng

    (Business School, Nanjing Xiaozhuang University, No. 3601 Hongjing Avenue, Jiangning District, Nanjing 211171, China)

  • Tong Zhao

    (Business School, Nanjing Xiaozhuang University, No. 3601 Hongjing Avenue, Jiangning District, Nanjing 211171, China)

Abstract

In recent years, the impact of global climate change has increasingly revealed that energy transformation has become an indispensable part of achieving carbon neutrality. Thus, the relationship between energy transformation and economic growth has become the focus of academic attention. This study examines energy transition issues by using the panel threshold method. It explores the nonlinear impact of renewable energy consumption on economic growth, identifies various factors that lead to this nonlinear impact, and verifies its threshold effect. A comprehensive analysis reveals the following. (1) Overall, renewable energy consumption inhibits real gross domestic product (GDP) growth, but, in the long run, the negative impact becomes positive. (2) The threshold effect of energy consumption intensity (EI) is significant, with a threshold value of approximately 3.213. This means that when EI ≤ 3.213, renewable energy consumption promotes economic growth. However, EI > 3.213 indicates that this impact is significantly negative, which means that advancing the energy transition at this time may occur at the expense of real GDP growth. (3) There is also a significant threshold effect in energy transformation, with a threshold value of approximately 6.456. Similarly, when energy consumption transition (ET) ≤ 6.456, renewable energy consumption dampens real economic growth, and the economic cost of promoting renewable energy consumption is greater at this time. Alternatively, when ET > 6.456, this impact is significant at the 1 percent level and significantly positive. (4) There is also a significant threshold effect for emerging technologies, with a threshold value of approximately 1.367. When ET ≤ 1.367, renewable energy consumption dampens real economic growth, and the economic cost of promoting renewable energy consumption is greater. When ET > 1.367, the impact is significantly positive at the 1% level. To promote the positive development of economic growth, climate change, and energy transition, the nonlinear relationship studied in this paper can fill the gaps in existing research in theory and provide a theoretical basis for the government to adopt different policies at different stages of the energy transition to lay the foundation for improving global climate change in practice.

Suggested Citation

  • Yuting Feng & Tong Zhao, 2022. "Exploring the Nonlinear Relationship between Renewable Energy Consumption and Economic Growth in the Context of Global Climate Change," IJERPH, MDPI, vol. 19(23), pages 1-17, November.
    • Handle: RePEc:gam:jijerp:v:19:y:2022:i:23:p:15647-:d:983455
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