Renewable energy consumption and economic growth of Rwanda, 1990-2015

Abstract

Energy being the engine of economic growth is necessary would be of great role when it is clean so as to ensure the environmental sustainability for the benefit of not only single individual but also the one of the globe entirely. This study is about the renewable energy consumption and economic growth of Rwanda This study is about the renewable energy consumption and economic growth of Rwanda from1990-2015. It was guided by both general and specific research objectives whereby the major objective was examining the contribution renewable energy consumption and economic growth of Rwanda and the specific objectives were to identify renewable sources used in Rwanda, to find out the relationship between renewable energy consumption an economic growth of Rwanda growth of Rwanda. The useful data were obtained from the world development indicators dataset by considering the published data related to Rwanda. In this regards, the method which was used was the vector autoregressive model. The research considered the test of stationarity so as to avoid the spurious regression. By applying the Augmented dickey and fuller test have been used to ensure that the estimated results avoid the problem of spurious inferences. The estimated results reveal that, according to the ADF, PP tests, only the first difference of all the variables are stationary at the I (1) level. The data were presented through the descriptive statistics where the real gross domestic production was measured in 2010 US dollars, renewable energy consumption was measured in Terajoules (TJ), total labor force is measured as number of population, carbon dioxide emission as measure in the metric tons of CO2 equivalence and the gross capital formation was finally measured as 2010 US dollars. Additionally, the intervention of cointegration revealed that the trace statistic of 6.25 is lower than the critical value of 12.53 for maximum rank of 3 cointegration equations at the 5% significance level. The findings on cointegration depicted the long run relationship between research variables namely GDP, renewable energy consumption capital, labor force, and he amount of CO2 emissions which were expressed in Kiloton (kt). The country was recommended to reduce the dependence on energy imports especially fossil fuels, lower greenhouse gas emission, increase employment through job creation through deployment and dissemination of clean and non-polluting energy sources in the energy sector and improve innovation in the nonpolluting industries.