The Relationship between Renewable Energy Consumption and Economic Growth: Insights from Iceland and Azerbaijan

• Published in: International Journal of Energy Economics and Policy
• Main Authors: Shafa Aliyev, Ramil I. Hasanov, Khanim Aghayeva, Javadkhan Y. Gasimov, Sadagat E. Ahmadova
• Format: Article in Journal/Newspaper
• Language: English
• Published: EconJournals 2024
• Subjects: Renewable Energy Consumption; Economic Growth; Toda-Yamamoto Causality Test; Iceland; Green Economics; Sustainability; Environmental sciences; GE1-350; Energy industries. Energy policy. Fuel trade; HD9502-9502.5
• Online Access: https://doi.org/10.32479/ijeep.16490; https://doaj.org/article/b0a74febd9624e3db7ae287f79f39db7

Iceland leads globally in per capita green energy production, while oil-dependent Azerbaijan endeavors to transition its energy policy towards sustainable alternatives. Investigating the impacts of renewable energy consumption on the economy represents a significant contemporary scientific inquiry. The objective of this research is to empirically examine the causal relationship between GDP per capita, a key metric of economic growth, and renewable energy consumption, a fundamental aspect of the green economy. In this research, the Toda-Yamamoto causality test framework of the vector autoregressive (VAR) model was utilized to examine the causal relationship between the variables. The outcomes of this investigation reveal a significant causality between renewable energy consumption and economic growth in Iceland and Azerbaijan.