Spatial relationship between economic growth and renewable energy consumption in 26 European countries

Abstract

The relationship between economic growth (GDP) and renewable energy consumption in different regions has been studied using different methods and data. However, most of these studies focus on the temporal aspect but do not explain the type of relationship between GDP and renewable energy since they assume that each country is an island unto itself and do not consider the possible spatial relationship between neighbouring countries. In this study, we have used a spatial Durbin model with panel data to investigate the spatial dependence between GDP and renewable energy consumption for 26 European countries over the period 1991–2015. We conclude that spatial dependence leads to a change in renewable energy consumption that affects the GDP of neighbouring countries. Specifically, a 1% increase in the renewable energy consumption of one country will increase economic growth by up to 0.06% in the GDP of its neighbouring countries.