Renewable energy, non-renewable energy and economic growth in Brazil

Abstract

This study employs Brazil's yearly statistics from 1980 to 2010 to explore the causal relationships between the real GDP and four types of energy consumption: non-hydroelectric renewable energy consumption (NHREC), total renewable energy consumption (TREC), non-renewable energy consumption (NREC), and the total primary energy consumption (TEC). The cointegration test reveals a long-run equilibrium among Brazil's real GDP, labour, capital, and each of the four types of consumption. The development of the Brazilian economy has close ties with capital formation and labour force. The influence of NHREC/TREC on real output is positive and significant, while the impacts by NREC/TEC are insignificant. The results from the vector error correction models reveal a unidirectional causality from NHREC to economic growth, a bidirectional causality between economic growth and TREC, and a unidirectional causality from economic growth to NREC or TEC without feedback in the long-run. These findings suggest that Brazil is an energy-independent economy and that economic growth is crucial in providing the necessary resources for sustainable development. Expanding renewable energy would not only enhance Brazil's economic growth and curb the deterioration of the environment but also create an opportunity for a leadership role in the international system and improve Brazil's competition with more developed countries. (C) 2013 Elsevier Ltd. All rights reserved.