Using Less Energy Doesn't Always Mean Economic Pain, Study Finds

More energy use often boosts the economy-but cutting back doesn't hurt as much as people fear, a new study reveals. It confirms a long-held belief: there is a strong link between energy use and GDP (Gross Domestic Product) growth, and this trend holds true across developed, developing, and underdeveloped nations.
However, the study uncovered something surprising. In many countries, reducing energy use had little to no negative effect on their economies. A crucial finding was this asymmetric relationship, wherein increased energy use would not trigger or cause equivalent decreases in energy use.

The researchers proceeded to examine what effects might occur if energy use were somehow curtailed. Usually higher energy use promotes high economy, but decreased energy use does not pursue an equivalent contraction of the economy. Examples include OECD countries, where more energy often means more growth, but saving energy does not put GDP growth down a big hole.

This flips a common worry on its head. If cutting energy use doesn't significantly impact GDP, then it opens up big opportunities for sustainability. Countries can reduce fossil fuel consumption, invest in renewables, and take meaningful climate action-without crashing their economies.

It's not just about cutting back; it's about moving forward. Governments could introduce incentives for energy-efficient technologies or enforce policies to reduce energy waste, knowing the economic fallout could be minimal. In short, thriving in a cleaner world might be more possible-and profitable-than we thought.
The study suggests that energy conservation isn't the economic boogeyman it's made out to be. For policymakers, this could mean bolder steps toward sustainability without the fear of stunting growth.

How they did it
The researchers collected data from 80 countries and 20 country groupings, including middle- and lower-income countries, as well as regions such as the European Union and Sub-Saharan Africa, in order to determine the answer. Energy consumption (measured in kilogrammes of oil equivalent per person) and economic success (measured by Gross Domestic Product, or GDP-the total value of goods and services a country produces) were the main topics of their examination of annual data from 1970 to 2014.

Instead of analysing all the data in bulk, they studied it both globally and, on a country, -by-country basis to capture the unique economic and energy dynamics of each region. To do this, they used a statistical tool called the Nonlinear Autoregressive Distributed Lag (NARDL) model, which allowed them to separate and examine the effects of energy increases and decreases independently.

This study has shown that using green electricity has no negative impact on the economy. In fact, it allows countries to become more sustainable and transition toward a greener economy by adopting clean energy sources.