Renewable Energy Transition and Industrial Growth: Perspectives from Nigeria

By: Louis Mgbada Nwebonyi, Anuli Regina Ogbuagu, Anayochukwu Basil Chukwu

Pages: 679–698, Volume: 3, Number: 1

Published by: AEFUNAI Journal of Economics, Finance and Development Studies, Alex Ekwueme Federal University, Ndufu-Alike, 5/1/2026, 2026

ISSN (Electronic): 2536-6742

DOI:

Renewable Energy Transition and Industrial Growth: Perspectives from Nigeria

Abstract:

This study investigates how Renewable Energy Consumption (REC) and Environmental Pressure affect economic growth in Nigeria over the period 1990–2021, using the Autoregressive Distributed Lag (ARDL) modelling framework. The analysis focuses on REC, Carbon Dioxide emissions per capita (CO₂PC), Gross Fixed Capital Formation (GFCF), and Labour Force Participation Rate (LFPR) within a log-level specification in which real Gross Domestic Product (GDP) is expressed in logarithmic form. The bounds test confirms the existence of a stable long-run relationship among the variables. The long-run estimates reveal that REC exerts a significant negative effect on economic growth, indicating that increases in renewable energy consumption are associated with reductions in real GDP during the study period. CO₂PC and GFCF also exhibit significant negative long-run effects, suggesting that environmental pressures and inefficiencies in capital allocation may constrain longterm economic performance, while LFPR showed a weakly-significant positive effect on GDP. Shortrun dynamics were examined using the error correction model (ECM). The error correction term is negative and highly significant (–0.3905), indicating that approximately 39 percent of short-run disequilibrium is corrected annually, confirming a stable adjustment process toward long-run equilibrium. The findings highlight the need for a transition toward modern renewable technologies, improved environmental management, and more efficient capital investment strategies to support sustainable economic growth in Nigeria.

Keywords: Renewable energy consumption; economic growth; carbon emissions; ARDL model; energy transition; Nigeria