Renewable Energy Consumption and Economic Growth in Uganda

Abstract

This paper concerns itself with the relationship of renewable energy consumption on economic growth in Uganda using data of 1988-2018. Uganda is gifted with renewable energy resources and should be exploring the possibility of meeting the Sustainable Development Goal 7. This paper uses vector error correction model, the augmented Dickey Fuller test for stationarity while for cointegration the Johansen test were used. The Granger test was used to test for causality between the variables of interest. The findings indicate a negative relationship between renewable energy and economic growth. While a positive relationship exist between Gross Domestic Product and gross capita formation, electricity trade, carbon dioxide emissions and Trade Openness that are taken as controls of this model. In conclusion therefore, Uganda need to pursue clean energy policies, while expanding its electricity trade in the East African community in order to absorb the excess electricity supply over peak domestic consumption. This paper will also increase the understanding on the need to integrate energy markets with in the region for greater benefits.