Transforming to Renewable Energy Sources and Connecting Green Growth

Abstract

Newswise — The current economic growth model that puts the economy first is no longer relevant due to the great need for a balanced and sustainable growth model that encompasses both economic expansion and environmental sustainability and the protection of natural resources, which is essential to explaining carbon neutrality and the Sustainable Development Goals.

The impact of renewable energy transition on green growth is investigated in this study through a rigorous econometric analysis of panel data from fourteen Latin American countries from 2003 to 2020, with a focus on: identifying the underlying mechanisms through which renewable energy transition affects green growth, assessing the heterogeneous effects of renewable energy transition by geographic location and natural resource dependency, and assessing the spatial spillover effects of renewable energy transition on green growth. The results of this study confirm that renewable energy transition significantly boosts green growth; but its effect varies significantly depending on the country’s geographic location, fossil fuel dependency, and mineral resource dependency. This study also identifies five intermediary variables between renewable energy transition and green growth: capital investment, hydropower dependency for electricity generation, household electricity consumption per capita, human capital, and formal job creation. Finally, a negative spatial spillover effect of renewable energy transition occurs in the Latin American region.