Abstract

Author:
Onum Friday Okoh, Agama Omachi

Doi: 10.26480/egnes.02.2025.71.78

This is an open access article distributed under the Creative Commons Attribution License CC BY 4.0, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited

This study examines the impact of renewable energy consumption on economic growth in Nigeria from 1990 to 2024, applying the Autoregressive Distributed Lag (ARDL) bounds testing approach and the Vector Autoregressive (VAR) Granger causality framework. Anchored on the Endogenous Growth Theory, the analysis incorporates real GDP, renewable energy consumption, gross capital formation, labor force, and foreign direct investment, using annually sourced World Bank data. Unit root tests confirm a mix of I(0) and I(1) variables, validating the ARDL methodology. While the bounds test establishes a long-run cointegrating relationship among the variables, the results indicate that renewable energy consumption does not exert a statistically significant impact on economic growth in either the short or long run. Conversely, gross capital formation and foreign direct investment exhibit marginal positive effects on GDP. The significant and negative error correction term confirms a stable long-run adjustment mechanism. Granger causality tests reveal no direct causal link between renewable energy consumption and GDP; however, renewable energy, capital formation, and FDI significantly influence labor force dynamics. These findings suggest that despite Nigeria’s renewable energy potential, its current contribution to economic performance remains limited. The study underscores the need for targeted policy interventions, infrastructure investment, and institutional support to enhance the role of renewable energy in driving sustainable economic growth.