Owing to the adverse effect of carbon dioxide emission, there have been calls for economies to rely on (cleaner) renewable energy. Although empirical studies on the subject matter abound the conflicting outcome, the less attention paid to combustible renewable and waste, and the little empirical evidence of the effect of financial development and industrialization on renewable energy consumption necessitate further studies. This study aims to examine the drivers of renewable energy consumption for Ghana whose share of renewable energy consumption in the total energy consumption has been reducing over the past decade, with fossil fuel consumption remaining high.
Based on the demand theory and empirical studies, the paper models total renewable energy consumption and combustible renewables and waste as a function of income, price, financial development and industrialization. Regression and variance decomposition techniques were used to analyze the data.
Ghana’s renewable energy consumption is positively influenced by industrialization, but negatively influenced by price, income and financial development in the long run, while in the short run, industrialization and financial development affect renewable energy consumption.
The findings imply that the transition to cleaner energy is not a matter of income level alone. Future research should investigate the drivers of other renewable energy consumption and the possible challenges to green finance in Ghana’s financial sector.
The effect of financial development and industrialization on renewable energy consumption is examined. Previous econometric analyses have also focused on total renewable energy, but this study adds combustible renewable and waste to the analysis.
