Does renewable energy affect economic growth? Evidence from panel data estimation of BRIC countries

Since the Kyoto Protocol Agreement 1997, the global community is striving towards implementing renewable energy practices and thereby contribute to the sustainability of growth. Committing to this cause, developed and emerging economies have been increasing the production and consumption of renewable energy in absolute terms. The growth hypothesis states that economic growth of the country is negatively affected when the share of renewable energy to total energy mix increases. While other hypotheses contradict with this notion and such contradiction has created a vacuum in the literature. This paper has the objective to study the impact of changes in the share of renewable energy to the total energy mix and test the validity of growth hypothesis applying to the BRIC (Brazil, Russia, India and China) countries. The study uses the secondary data covering the period 1990?2015. Share of renewable energy consumption in total energy consumption and share of renewable electricity output in total energy output have been taken as proxies to renewable energy, and economic growth is measured by GDP per capita. A panel regression model has been estimated and the result finds evidence to support the growth hypothesis. It is found that the decreasing share of renewable energy to the total energy might have contributed to the faster economic growth in BRIC region. It implies that in BRIC countries, if the share of renewable energy to total energy increases, the economic growth will have negative impact.