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The interconnections between Renewable Energy, Economic Development and Environmental Pollution. A simultaneous equation system approach

Author

Listed:
  • Elias Soukiazis

    (CeBER and Faculty of Economics of the University of Coimbra)

  • Sara Proença

    (CERNAS/ESAC Polytechnic Institute of Coimbra)

  • Pedro André Cerqueira

    (CeBER and Faculty of Economics of the University of Coimbra)

Abstract

The relationship between renewable energy sources and economic growth has attracted the interest of researchers in recent years. However, the analysis has focused mostly on measuring the impact of renewable energy consumption on economic performance (such as economic growth) that does not reflect the quality of standards of living. We employ a different approach measuring the impact of renewable energy consumption on the Human Development Index (HDI) that considers these qualitative characteristics associated with better health and educational standards along with income performance. Additionally, we develop a simultaneous equation system approach that describes the interrelations between economic variables, renewable energy and pollution emissions with feedback effect tendencies. We provide robust evidence using panel data for a set of 28 OECD countries over the period 2004-2015. The system of equations is estimated by 3sls considering a static and dynamic specification of the model. It is shown that renewable energy consumption along with human and physical capital are important factors for explaining the sustainable development level of the countries considered. Renewable energy consumption is mostly determined by higher levels of human capital, the R&D spending and the stage of countries’ development. Factors like the stage of development, total energy consumption, renewable energy consumption and standard levels of education are important elements for explaining environmental pollution (measured by CO2 emissions per capita). It is also established a non-linear relationship between the countries` stage of development and carbon emissions.

Suggested Citation

  • Elias Soukiazis & Sara Proença & Pedro André Cerqueira, 2017. "The interconnections between Renewable Energy, Economic Development and Environmental Pollution. A simultaneous equation system approach," CeBER Working Papers 2017-10, Centre for Business and Economics Research (CeBER), University of Coimbra.
  • Handle: RePEc:gmf:papers:2017-10
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    References listed on IDEAS

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    2. Ouedraogo, Nadia S., 2013. "Energy consumption and human development: Evidence from a panel cointegration and error correction model," Energy, Elsevier, vol. 63(C), pages 28-41.
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    Cited by:

    1. Yao, Yao & Ivanovski, Kris & Inekwe, John & Smyth, Russell, 2019. "Human capital and energy consumption: Evidence from OECD countries," Energy Economics, Elsevier, vol. 84(C).
    2. Gamze Sart & Yilmaz Bayar & Funda Hatice Sezgin & Marina Danilina, 2022. "Impact of Educational Attainment on Renewable Energy Use: Evidence from Emerging Market Economies," Energies, MDPI, vol. 15(7), pages 1-15, April.
    3. Zheng, Jiajia & Wang, Xingwu, 2022. "Impacts on human development index due to combinations of renewables and ICTs --new evidence from 26 countries," Renewable Energy, Elsevier, vol. 191(C), pages 330-344.
    4. Zohra Dradra & Chokri Abdennadher, 2023. "Modeling the effects of renewable energy on sustainable development: evidence from simultaneous equations models," Economic Change and Restructuring, Springer, vol. 56(4), pages 2111-2128, August.
    5. Ali, Shahid & Xiaohong, Zhou & Hassan, Syed Tauseef, 2024. "The hidden drivers of human development: Assessing its role in shaping BRICS-T's economics complexity, and bioenergy transition," Renewable Energy, Elsevier, vol. 221(C).
    6. Du, Weijian & Li, Mengjie, 2023. "Opening the black box of environmental governance: Environmental target constraints and industrial firm pollution reduction," Energy, Elsevier, vol. 283(C).
    7. Filippidis, Michail & Tzouvanas, Panagiotis & Chatziantoniou, Ioannis, 2021. "Energy poverty through the lens of the energy-environmental Kuznets curve hypothesis," Energy Economics, Elsevier, vol. 100(C).
    8. Alexei Yumashev & Beata Ślusarczyk & Sergey Kondrashev & Alexey Mikhaylov, 2020. "Global Indicators of Sustainable Development: Evaluation of the Influence of the Human Development Index on Consumption and Quality of Energy," Energies, MDPI, vol. 13(11), pages 1-13, June.
    9. Zhao, Jun & Wang, Bo & Dong, Kangyin & Shahbaz, Muhammad & Ni, Guohua, 2023. "How do energy price shocks affect global economic stability? Reflection on geopolitical conflicts," Energy Economics, Elsevier, vol. 126(C).
    10. Eirini Stergiou & Nikos Rigas & Eftychia Zaroutieri & Konstantinos Kounetas, 2023. "Energy, renewable and technical efficiency convergence: a global evidence," Economic Change and Restructuring, Springer, vol. 56(3), pages 1601-1628, June.
    11. Marta Skiba & Maria Mrówczyńska & Agnieszka Leśniak & Natalia Rzeszowska & Filip Janowiec & Małgorzata Sztubecka & Wioleta Błaszczak-Bąk & Jan K. Kazak, 2024. "Implication of the EU Countries’ Energy Policy Concerning Scenarios Affecting the Air Quality Improvement," Energies, MDPI, vol. 17(16), pages 1-18, August.
    12. Pedro André Cerqueira & Elias Soukiazis & Sara Proença, 2021. "Assessing the linkages between recycling, renewable energy and sustainable development: evidence from the OECD countries," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(7), pages 9766-9791, July.
    13. Iorgovan Daniela, 2024. "Artificial Intelligence and Renewable Energy Utilization," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 18(1), pages 2776-2783.
    14. Kaewnern, Hathaipat & Wangkumharn, Sirikul & Deeyaonarn, Wongsathon & Yousaf, Abaid Ullah & Kongbuamai, Nattapan, 2023. "Investigating the role of research development and renewable energy on human development: An insight from the top ten human development index countries," Energy, Elsevier, vol. 262(PB).
    15. Paweł Ziemba & Abdullah Zair, 2023. "Temporal Analysis of Energy Transformation in EU Countries," Energies, MDPI, vol. 16(23), pages 1-21, November.
    16. Zhuang, Zheng-Yun & Chung, Cheng-Kung, 2024. "Dissecting the visiting willingness of driving visitors facing a retail market's dual-pricing policy for parking," Journal of Retailing and Consumer Services, Elsevier, vol. 78(C).
    17. Mahmut Unsal Sasmaz & Emre Sakar & Yunus Emre Yayla & Ulas Akkucuk, 2020. "The Relationship between Renewable Energy and Human Development in OECD Countries: A Panel Data Analysis," Sustainability, MDPI, vol. 12(18), pages 1-16, September.
    18. Henrique Oliveira & Víctor Moutinho, 2021. "Renewable Energy, Economic Growth and Economic Development Nexus: A Bibliometric Analysis," Energies, MDPI, vol. 14(15), pages 1-28, July.
    19. Sara Proença & Elias Soukiazis, 2023. "The process of sustainable entrepreneurship: a multi-country analysis," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(10), pages 10995-11010, October.
    20. Wang, Shuhong & Wang, Xiaoqing & Lu, Binbin, 2022. "Is resource abundance a curse for green economic growth? Evidence from developing countries," Resources Policy, Elsevier, vol. 75(C).
    21. Tehmina Zahid & Noman Arshed & Mubbasher Munir & Kamran Hameed, 2021. "Role of energy consumption preferences on human development: a study of SAARC region," Economic Change and Restructuring, Springer, vol. 54(1), pages 121-144, February.

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    More about this item

    Keywords

    Renewable energy; human development index; simultaneous equation system; panel data.;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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