Does Energy Consumption Improve Economic Growth? An Empirical Evidence from Nigeria

The increasing quest for clean energy due to environment degredation and role of energy in the growth process in developing economies make it imperative to examine the effect of renewable (hydroelectric) and nonrenewable (petroleum oil and natural gas) energy consumption on economic growth in Nigeria. To acheive the purpose of the study data on petroleum oil, natural gas, hydroelectric and real economic growth were sourced from the Central Bank of Nigeria Statistical Bulletin, World Development Indicator (WDI) and the International Energy Association (IEA). The study utilised the econometric technique of cointegration and error correction mechanism (ECM) to investigate the relationship between the consumption of the types of energy and economic growth. Results from the study indicate that the utilisation of renewable energy sources, hydro power, had a substantial adverse effect on economic growth. Conversely, the use of nonrenewable energy sources, petroleum oil and natural gas, had a substantial contribution to boosting economic growth in Nigeria. This implies that non renewable energy source has serious positive implication on economic growth in Nigeria over the period of the study. Based on the findings, it was recommended among others that the players in the energy sector should increase investment in both downstream and upstream components in the energy sector in order to enhance efficiency, value chain and economic growth in Nigeria.