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Sustainable Financing for Renewable Energy: Examining the Impact of Sectoral Economy on Renewable Energy Consumption

Author

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  • Edosa Getachew

    (School of Economic and Regional Sciences, Hungarian University of Agriculture and Life Sciences, 2100 Godollo, Hungary
    Department of Banking & Finance, College of Business and Economics, Wallaga University, Nekemte P.O. Box 395, Ethiopia)

  • Zoltan Lakner

    (School of Economic and Regional Sciences, Hungarian University of Agriculture and Life Sciences, 2100 Godollo, Hungary)

  • Goshu Desalegn

    (School of Economic and Regional Sciences, Hungarian University of Agriculture and Life Sciences, 2100 Godollo, Hungary
    Department of Accounting and Finance, Faculty of Business and Economics, Kotobe University of Education, Addis Ababa P.O. Box 5563, Ethiopia)

  • Anita Tangl

    (School of Management and Business Administration, John von Neumann University, 6000 Kecskemét, Hungary)

  • Anita Boros

    (Circular Economy Analysis Center, Hungarian University of Agriculture and Life Sciences, 2100 Godollo, Hungary)

Abstract

This study examines the effect of international financial flows, including investments and development assistance, on the expansion of renewable energy technologies. It also seeks to investigate the impact of the sectoral economy on the proportion of renewable energy consumption in Ethiopia. This study used an explanatory research design and a quantitative research approach. An autoregressive distributed lag model was applied to explore the long and short-term relationship among variables. A time series of data aggregated and disaggregated ranging from 2000 to 2022 was used. According to this study, sustainable finance programs are essential for advancing and aiding renewable energy projects in the long and short term. Ethiopia’s use of renewable energy will increase as sustainable finance rises. The main economic sectors determining Ethiopia’s consumption of renewable energy in the long and short term include the manufacturing, mining and service industries. This study’s findings imply that policies focusing on providing continuous financial support and fostering international cooperation to promote the development of the manufacturing sector are needed. This could include incentives for adopting renewable energy technologies and investing in renewable energy infrastructure. On the other hand, since the service and mining industries negatively impact renewable energy use, there is a need to diversify renewable energy sources beyond these sectors. This could involve promoting renewable energy projects in other sectors, such as manufacturing, agriculture, construction and trade. Based on the findings of this study, it is suggested that policymakers carefully consider the consequences within each economic sector when formulating decisions related to renewable energy. This study is novel in presenting empirical evidence linking renewable energy use to long- and short-term economic growth.

Suggested Citation

  • Edosa Getachew & Zoltan Lakner & Goshu Desalegn & Anita Tangl & Anita Boros, 2024. "Sustainable Financing for Renewable Energy: Examining the Impact of Sectoral Economy on Renewable Energy Consumption," Economies, MDPI, vol. 12(6), pages 1-16, May.
    • Handle: RePEc:gam:jecomi:v:12:y:2024:i:6:p:127-:d:1398868
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    References listed on IDEAS

    as
    1. Adekoya, Oluwasegun B. & Ogunnusi, Timilehin P. & Oliyide, Johnson A., 2021. "Sector-by-sector non-renewable energy consumption shocks and manufacturing performance in the U.S.: Analysis of the asymmetric issue with nonlinear ARDL and the role of structural breaks," Energy, Elsevier, vol. 222(C).
    2. Teshager Mazengia Asratie & David McMillan, 2021. "Determinants of financial development in Ethiopia: ARDL approach," Cogent Economics & Finance, Taylor & Francis Journals, vol. 9(1), pages 1963063-196, January.
    3. Bohland, Moritz & Schwenen, Sebastian, 2022. "Renewable support and strategic pricing in electricity markets," International Journal of Industrial Organization, Elsevier, vol. 80(C).
    Full references (including those not matched with items on IDEAS)

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