The Impact of Renewable Energy on the Environment and Socio-economic Welfare: Empirical Evidence from OECD Countries

The role of renewable energy is increasingly considered in promoting sustainable development and rebalancing environmental degradation and socio-economic development. To shed light on the relationship between energy, economy, and society, we aim to assess the ability of renewable energy to reduce the negative impact of CO2 emissions on economic growth and human development using the system GMM estimator for 24 OECD countries using annual data over the period 1990–2015. The empirical results show that (i) the use of renewable energy can reduce the negative impact of CO2 emissions on both economic growth and human development; (ii) the four indicators of CO2 emissions have a negative impact on economic growth and human development; (iii) renewable energy interacts with CO2 intensity, which has a positive impact on economic growth and human development; and (iv) the impact of the interaction between renewable energy and CO2 emissions per capita is positive, i.e., when renewable energy replaces non-renewable energy, it reduces CO2 emissions per capita, while the overall effect of this interaction promotes health prospects, human development, and economic growth.