Renewable energy and current account balance nexus

Area of Science:

• Environmental Science
• Economics
• Energy Policy

Background:

• Sustainable energy future relies on renewable energy.
• Addressing energy problems requires a focus on renewables.
• G20 countries face challenges in energy production and consumption.

Purpose of the Study:

• Investigate the dynamic and causal relationships among key energy and economic variables for G20 countries.
• Analyze the impact of economic growth, energy imports, and consumption on renewable energy generation.
• Determine the causal links between current account balance and renewable energy production.

Main Methods:

• Panel Fourier bootstrapping autoregressive distributed lag (ARDL) model applied to G20 countries data from 1976-2019.
• Empirical analysis to determine cointegration among selected variables.
• Causality testing to establish directional relationships.

Main Results:

• Cointegration confirmed between renewable energy production, current account balance, energy imports, renewable energy consumption, and economic growth.
• Economic growth, energy imports, energy consumption, and current account balance significantly impact renewable energy generation.
• Unidirectional causality found from energy imports, renewable energy consumption, and current deficit to renewable energy production.

Conclusions:

• Reducing energy import dependence can enhance renewable energy production and improve environmental quality.
• Decreased energy imports contribute to reducing current account imbalances.
• Policy interventions focusing on energy imports and consumption can drive renewable energy growth and economic benefits.