The effect of Energy Consumption, Renewable Energy, and Circular Energy on economic growth in Nigeria
Abstract
This study investigates the effect of energy consumption, renewable energy, and circular energy on Nigeria’s economic growth using an ex-post facto research design. Time series data from 2010 to 2023 were sourced from Statista and the Central Bank of Nigeria (CBN) Statistical Bulletin. The study employed various statistical tools, including Descriptive Statistics, Group Unit Root Test, Johansen Cointegration Test, and the Vector Error Correction Model (VECM), with post-analysis tests ensuring model validity. Findings revealed that primary energy consumption had an insignificant positive effect on economic growth due to inefficiencies, transmission losses, and over-reliance on fossil fuels. Total renewable energy capacity also showed a positive but insignificant impact, indicating its potential in driving economic expansion with adequate investment and policy support. However, circular energy exhibited a negative effect, highlighting Nigeria’s underdeveloped recycling capacity and the need for technological advancements. The study concludes that energy plays a vital role in economic growth but requires a diversified and efficient strategy to maximize its benefits. It recommends upgrading energy infrastructure to enhance efficiency, increasing investments in renewable energy through incentives and financing options, and fostering circular energy innovations via policy frameworks, financial incentives, and research development. By addressing these areas, Nigeria can achieve a more sustainable and resilient energy economy.
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