The impact of renewable energy sources on economic growth and CO2 emissions - a SVAR approach
AbstractOver the last years renewable energy sources (RES) have increased their share on electricity generation of most developed economies due to environmental and security of supply concerns. The aim of this paper was to analyze how an increasing share of RES on electricity generation (RES-E) affects Gross Domestic Product (GDP) and carbon dioxide (CO2) emissions. Several methodologies could be used for this purpose. The Structural Vector Autoregressive (SVAR) methodology considers the interactions among all variables in the model and is well suited to predict the effects of specific policy actions or important changes in the economy. Therefore, we chose to implement this methodology. We used a 3 variable SVAR model for a sample of four countries along the period 1960-2004. The existence of unit roots was tested to infer the stationarity of the variables. The countries chosen have rather different levels of economic development and social and economic structures but a common effort of investment in RES in the last decades. Through the impulse response functions (IRF), the SVAR estimation showed that, for all countries in the sample, except for the USA, the increasing RES-E share had economic costs in terms of GDP per capita. As expected, there was also an evident decrease of CO2 emissions per capita. The variance decomposition showed that a significant part of the forecast error variance of GDP per capita and a relatively smaller part of the forecast error variance of CO2 per capita were explained by the share of RES-E.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Universidade do Porto, Faculdade de Economia do Porto in its series FEP Working Papers with number 407.
Length: 21 pages
Date of creation: Mar 2011
Date of revision:
Renewables; economic growth; CO2 emissions; SVAR;
Other versions of this item:
- Susana Silva & Isabel Soares & Carlos Pinho, 2012. "The Impact of Renewable Energy Sources on Economic Growth and CO2 Emissions - a SVAR approach," European Research Studies Journal, European Research Studies Journal, vol. 0(Special I), pages 133-144.
- O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
- Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
- Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
- Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-03-12 (All new papers)
- NEP-ENE-2011-03-12 (Energy Economics)
- NEP-ENV-2011-03-12 (Environmental Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Soytas, Ugur & Sari, Ramazan, 2003. "Energy consumption and GDP: causality relationship in G-7 countries and emerging markets," Energy Economics, Elsevier, vol. 25(1), pages 33-37, January.
- Robalo, Pedro Brito & Salvado, João Cotter, 2008. "Oil price shocks and the Portuguese economy since the 1970s," FEUNL Working Paper Series wp529, Universidade Nova de Lisboa, Faculdade de Economia.
- Lee, Chien-Chiang & Chang, Chun-Ping, 2007. "Energy consumption and GDP revisited: A panel analysis of developed and developing countries," Energy Economics, Elsevier, vol. 29(6), pages 1206-1223, November.
- Soytas, Ugur & Sari, Ramazan, 2006. "Energy consumption and income in G-7 countries," Journal of Policy Modeling, Elsevier, vol. 28(7), pages 739-750, October.
- David I. Stern & Cutler J. Cleveland, 2004. "Energy and Economic Growth," Rensselaer Working Papers in Economics 0410, Rensselaer Polytechnic Institute, Department of Economics.
- Chang, Ting-Huan & Huang, Chien-Ming & Lee, Ming-Chih, 2009. "Threshold effect of the economic growth rate on the renewable energy development from a change in energy price: Evidence from OECD countries," Energy Policy, Elsevier, vol. 37(12), pages 5796-5802, December.
- Karsten Neuhoff, 2005.
"Large-Scale Deployment of Renewables for Electricity Generation,"
Oxford Review of Economic Policy,
Oxford University Press, vol. 21(1), pages 88-110, Spring.
- Neuhoff, K., 2004. "Large Scale Deployment of Renewables for Electricity Generation," Cambridge Working Papers in Economics 0460, Faculty of Economics, University of Cambridge.
- Ozturk, Ilhan, 2010. "A literature survey on energy-growth nexus," Energy Policy, Elsevier, vol. 38(1), pages 340-349, January.
- Bowden, Nicholas & Payne, James E., 2009. "The causal relationship between U.S. energy consumption and real output: A disaggregated analysis," Journal of Policy Modeling, Elsevier, vol. 31(2), pages 180-188.
- Ewing, Bradley T. & Sari, Ramazan & Soytas, Ugur, 2007. "Disaggregate energy consumption and industrial output in the United States," Energy Policy, Elsevier, vol. 35(2), pages 1274-1281, February.
- Sadorsky, Perry, 2009. "Renewable energy consumption and income in emerging economies," Energy Policy, Elsevier, vol. 37(10), pages 4021-4028, October.
- Halicioglu, Ferda, 2008.
"An econometric study of CO2 emissions, energy consumption, income and foreign trade in Turkey,"
11457, University Library of Munich, Germany.
- Halicioglu, Ferda, 2009. "An econometric study of CO2 emissions, energy consumption, income and foreign trade in Turkey," Energy Policy, Elsevier, vol. 37(3), pages 1156-1164, March.
- Jonathan Kohler, Terry Barker, Dennis Anderson and Haoran Pan, 2006. "Combining Energy Technology Dynamics and Macroeconometrics: The E3MG Model," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 113-134.
- Narayan, Paresh Kumar & Narayan, Seema & Prasad, Arti, 2008. "A structural VAR analysis of electricity consumption and real GDP: Evidence from the G7 countries," Energy Policy, Elsevier, vol. 36(7), pages 2765-2769, July.
- Chontanawat, Jaruwan & Hunt, Lester C. & Pierse, Richard, 2008. "Does energy consumption cause economic growth?: Evidence from a systematic study of over 100 countries," Journal of Policy Modeling, Elsevier, vol. 30(2), pages 209-220.
- Payne, James E., 2010. "A survey of the electricity consumption-growth literature," Applied Energy, Elsevier, vol. 87(3), pages 723-731, March.
- Robert A Buckle & Kunhong Kim & Heather Kirkham & Nathan McLellan & Jared Sharma, 2002. "A structural VAR model of the New Zealand business cycle," Treasury Working Paper Series 02/26, New Zealand Treasury.
- Stern, David I., 1993. "Energy and economic growth in the USA : A multivariate approach," Energy Economics, Elsevier, vol. 15(2), pages 137-150, April.
- Christoph Bohringer and Andreas Loschel, 2006. "Promoting Renewable Energy in Europe: A Hybrid Computable General Equilibrium Approach," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 135-150.
- Sadorsky, Perry, 2009. "Renewable energy consumption, CO2 emissions and oil prices in the G7 countries," Energy Economics, Elsevier, vol. 31(3), pages 456-462, May.
- Eirik S. Amundsen & Lars Bergman, 2002. "Will Cross-Ownership Re-Establish Market Power in the Nordic Power Market?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 73-95.
- Apergis, Nicholas & Payne, James E., 2010. "Renewable energy consumption and economic growth: Evidence from a panel of OECD countries," Energy Policy, Elsevier, vol. 38(1), pages 656-660, January.
- Jalil, Abdul & Mahmud, Syed F., 2009. "Environment Kuznets curve for CO2 emissions: A cointegration analysis for China," Energy Policy, Elsevier, vol. 37(12), pages 5167-5172, December.
- Ciarreta Antuñano, Aitor & Zárraga Alonso, Ainhoa, 2007. "Electricity consumption and economic growth: evidence from Spain," BILTOKI 2007-01, Universidad del País Vasco - Departamento de Economía Aplicada III (Econometría y Estadística).
- Sari, Ramazan & Ewing, Bradley T. & Soytas, Ugur, 2008. "The relationship between disaggregate energy consumption and industrial production in the United States: An ARDL approach," Energy Economics, Elsevier, vol. 30(5), pages 2302-2313, September.
- Mark K. Jaccard & John Nyboer & Crhis Bataille & Bryn Sadownik, 2003. "Modeling the Cost of Climate Policy: Distinguishing Between Alternative Cost Definitions and Long-Run Cost Dynamics," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 49-73.
- Soytas, Ugur & Sari, Ramazan, 2009. "Energy consumption, economic growth, and carbon emissions: Challenges faced by an EU candidate member," Ecological Economics, Elsevier, vol. 68(6), pages 1667-1675, April.
- Chien, Taichen & Hu, Jin-Li, 2008. "Renewable energy: An efficient mechanism to improve GDP," Energy Policy, Elsevier, vol. 36(8), pages 3035-3042, August.
- Narayan, Paresh Kumar & Prasad, Arti, 2008. "Electricity consumption-real GDP causality nexus: Evidence from a bootstrapped causality test for 30 OECD countries," Energy Policy, Elsevier, vol. 36(2), pages 910-918, February.
- Maslyuk, Svetlana & Dharmaratna, Dinusha, 2013. "Renewable Electricity Generation, CO2 Emissions and Economic Growth: Evidence from Middle-Income Countries in Asia /Generación de electricidad renovable, las emisiones de CO2 y crecimiento económico," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 31, pages 217-244, Enero.
- Scandurra, Giuseppe & Romano, Antonio Angelo, 2011. "The investments in renewable energy sources: do low carbon economies better invest in green technologies?," MPRA Paper 34216, University Library of Munich, Germany.
- Antonio Angelo Romano & Giuseppe Scandurra, 2011. "The Investments in Renewable Energy Sources: Do Low Carbon Economies Better Invest In Green Technologies?," International Journal of Energy Economics and Policy, Econjournals, vol. 1(4), pages 107-115.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.