The impact of renewable energy consumption on economic growth in Nigeria: fresh evidence from a non-linear ARDL approach

The topic of climate change is so crucial that experts, world leaders, and international organizations are constantly working on how to solve this problem. One of the recommendations lies in using renewable energy to protect the global ecosystem and promote environmental sustainability. This study, therefore, examines the impact of renewable energy consumption (RNEW) on economic growth (RGDP) in Nigeria within the period of 1990Q1-2019Q4 using a non-linear autoregressive distributed lag (NARDL) model. This research contributes to existing literature by focusing on a single-country analysis using the NARDL methodology. Nigeria has the highest GDP in Africa and can drive continental growth. In addition, the NARDL approach examines the positive and negative shocks of the independent variables on the dependent variable. The bound test result confirms cointegration among the variables. Further results show that a positive shock of RNEW decreases RGDP, while a negative shock increases RGDP in the long run. This result differs from existing literature in which a majority of the studies found a positive relationship between RNEW and RGDP. In the short run, a positive shock of RNEW increases RGDP, while a negative shock decreases RGDP, although not significant. A positive shock in RNEW hurts RGDP because of the nature and source of renewable energy used in Nigeria, majorly wood biomass. Therefore, this study recommends that cleaner technologies be utilized to maximize the advantages of renewable energy sources, especially wood biomass, while minimizing their adverse effects.

Automated summary

This study examines the impact of renewable energy consumption on economic growth in Nigeria using a non-linear autoregressive distributed lag model. The findings suggest that in the long run, a positive shock to renewable energy consumption decreases economic growth, while a negative shock increases economic growth. This is different from existing literature, which mostly finds a positive relationship between renewable energy consumption and economic growth. However, in the short run, a positive shock increases economic growth, and a negative shock decreases economic growth, although the effects are not significant. The study recommends the use of cleaner technologies to maximize the benefits and minimize the adverse effects of renewable energy sources, especially wood biomass.