The Energy-Growth Nexus in Least Developed Countries: Empirical Insights on Renewable Energy and Energy Intensity

This chapter explores the relationship between renewable energy use and energy intensity in six least developed countries (LDCs), within the framework of Sustainable Development Goal 7 (SDG 7) and the broader energy-growth nexus (EGN). Using pooled and country-specific panel regressions, we investigate whether increasing the share of renewable energy contributes to improved energy efficiency. Contrary to expectations, the pooled model reveals a statistically significant positive relationship, indicating that renewable energy, particularly traditional biomass, may not reduce energy intensity in these contexts. Country-level findings vary, specifically Nepal, Cambodia, Bangladesh and Chad exhibit positive relationships, reflecting inefficient energy use or stagnating economic output. South Sudan displays a negative (though statistically insignificant) relationship, potentially linked to recent investments in solar mini-grids. The Central African Republic exhibits no clear trend, likely due to structural stagnation in its energy system. By positioning energy intensity as a proxy for the link between energy use and economic output, the chapter underscores that energy transitions in LDCs must be evaluated not just in environmental terms, but also in relation to growth and development outcomes. The findings highlight the need for growth-sensitive, modern renewable energy strategies and for policymakers to consider the structural conditions under which energy transitions occur. A just and effective transition must align clean energy goals with inclusive economic development.