Strategies to make renewable energy sources compatible with economic growth

This paper focuses on the relationship between economic activity, and renewable and non-renewable energy consumption for the set of countries with the largest usage of each energy source. The dominance of one type of energy source could raise an unintentional barrier to a strategy of energy mix diversification. A panel of 28 countries was studied, using annual data for the time span 1995-2013. The ARDL approach was used to capture the short- and long-run effects. The Driscoll-Kraay estimator was used to attain robust results given the presence of the phenomena of heteroscedasticity, contemporaneous correlation, first order autocorrelation and cross-sectional dependence. Results suggest that renewable energy has not contributed to economic growth, while non-renewable energy has contributed. This finding should be incorporated in the definition of energy strategies, specifically by making renewable energy compatible with economic growth.