The Nexus between Renewable Energy Consumption and Economic Growth : Evidence from the Nordic countries
Koistinen, Jonne (2025)
2025
Kauppatieteiden maisteriohjelma - Master's Programme in Business Studies
Johtamisen ja talouden tiedekunta - Faculty of Management and Business
Hyväksymispäivämäärä
2025-06-13
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:tuni-202506127137
https://urn.fi/URN:NBN:fi:tuni-202506127137
Tiivistelmä
One of the most pressing issues of our time is climate change, with its negative consequences increasingly present in media coverage and everyday life. As a result, economies are looking for ways to mitigate and adapt to these shifts in climate patterns and rising global temperatures while maintaining sustainable economic growth. As a part of these efforts, renewable energy has gained significant attention. However, despite its widely acknowledged environmental benefits, its economic implications remain less clear.
For these reasons, this thesis seeks to examine the relationship between renewable energy consumption and economic growth, focusing on the Nordic countries between 2000 and 2019. The main method of analysis is a fixed effects panel regression, supported by relevant theoretical and empirical literature to provide a solid framework. Additionally, the Nordic countries form an interesting subject of study as they are among the global leaders in renewable energy adoption. Moreover, to the best of the author’s knowledge, no prior research has focused specifically on this region, making this thesis a valuable contribution to existing literature.
The theoretical and empirical literature point to a complex and context-dependent relationship between economic growth and renewable energy consumption, further highlighting the importance of this study. The empirical results of this thesis indicate a positive relationship between the two variables in the Nordic countries. Specifically, a one percent increase in renewable energy consumption is associated with a 0.1 to a 0.4 percent increase in gross domestic product, depending on the model specification.
These findings suggest that increasing renewable energy consumption does not hinder economic growth. This implies that policymakers can promote renewable energy to achieve sustainable development goals without the worry of adverse effects on economic growth. However, as renewable energy technologies continue to evolve, ongoing research is necessary to stay up to date. Additionally, sector-specific or regional studies could help better tailor energy policy to economic needs. Overall, this thesis contributes to the growing body of research supporting the compatibility of environmental sustainability and economic development in advanced economies.
For these reasons, this thesis seeks to examine the relationship between renewable energy consumption and economic growth, focusing on the Nordic countries between 2000 and 2019. The main method of analysis is a fixed effects panel regression, supported by relevant theoretical and empirical literature to provide a solid framework. Additionally, the Nordic countries form an interesting subject of study as they are among the global leaders in renewable energy adoption. Moreover, to the best of the author’s knowledge, no prior research has focused specifically on this region, making this thesis a valuable contribution to existing literature.
The theoretical and empirical literature point to a complex and context-dependent relationship between economic growth and renewable energy consumption, further highlighting the importance of this study. The empirical results of this thesis indicate a positive relationship between the two variables in the Nordic countries. Specifically, a one percent increase in renewable energy consumption is associated with a 0.1 to a 0.4 percent increase in gross domestic product, depending on the model specification.
These findings suggest that increasing renewable energy consumption does not hinder economic growth. This implies that policymakers can promote renewable energy to achieve sustainable development goals without the worry of adverse effects on economic growth. However, as renewable energy technologies continue to evolve, ongoing research is necessary to stay up to date. Additionally, sector-specific or regional studies could help better tailor energy policy to economic needs. Overall, this thesis contributes to the growing body of research supporting the compatibility of environmental sustainability and economic development in advanced economies.