The nexus of renewable energy - sustainable development - environmental quality in Iran: Bayesian VAR approach

Document Type : Research Article


Economic Development Department, Economics and Management Faculty, Tabriz University, Tabriz, Iran


The use of renewable energy reduces environmental pollution and leads to achievement of sustainable development. The current study investigates the dynamic interrelationship between sustainable development, renewable and non-renewable energies and environment nexus by applying Bayesian vector autoregression (BVAR) and impulse response functions in Iran with an annual data frequency for the time span of 1980-2013. In this study, genuine savings (GS) were particularly examined to indicate sustainable development. The empirical results confirm the existence of cointegration long-run relationship among the variables. Based on BVAR analysis, SSVS-full and normal-Wishart functions were used as optimal prior functions to estimate renewable and non-renewable energies models, respectively. Results of impulse response functions indicate a positive impact of renewable and non-renewable energies consumption on sustainable development. Also, renewable and non-renewable energies consumption shocks positively affect CO2 emissions, but the effect of non-renewable energy consumption on air pollution is more than that of renewable energy consumption. Moreover, the results reveal positive impact of sustainable development shock on renewable energy consumption and negative impact on non-renewable energy consumption.


Amri, F. (2016). The relationship amongst energy consumption, foreign direct investment and output in developed and developing Countries. Renewable and Sustainable Energy Reviews, 64, 694-702.
Antonakakis, N., Chatziantoniou, I. and Filis, G. (2017). Energy consumption, CO 2 emissions, and economic growth: an ethical dilemma. Renewable and Sustainable Energy Reviews, 68, 808-824.
Apergis, N. and Payne, J. E. (2012). Renewable and non-renewable energy consumption-growth nexus: evidence from apanel error correction model. Energy Economics, 34, 733-738.
Ardestani, M. Shafie-Pour, M. and Tavakoli, A. (2017). Integration of Green Economy concept into Fossil Fuels (Production and Consumption: Iran). Environmental Energy and Economic Research, 1(1), 1-14 (In Persian).
Baris, K., and Kucukali, S., (2012). Availability of renewable energy sources in Turkey: Current situation, potential, government policies and the EU perspective. Energy Policy, 42, 377-391.
Belaid, F. and Yussef, M. (2017). Environmental degradation, renewable and non-renewable electricity consumption, and economic growth: Assessing the evidence from Algeria. Energy Policy, 102, 277-287.
Bozoklu, S. and Yilanci, V. (2013). Energy consumption and economic growth for selected OECD countries: Further evidence from the Granger causality test in the frequency domain. Energy Policy, 63, 877-881.
Cowan, WN., Chang, T., Inglesi-Lotz, R. and Gupta, R. (2014). The nexus of electricity consumption, economic growth and CO2 emissions in the BRICS countries. Energy Policy, 66, 359-68.
ENVI, (2011). Impact of Shale gas and shale oil extraction on the environment and on   human health. European Parliament Committees.
Fakher, H. A. and Abedi, Z. (2017). Relationship between Environmental Quality and Economic Growth in Developing Countries (based on Environmental Performance Index). Environmental Energy and Economic Research, 1(3), 300-310 (In Persian).
Fotros, M.H., Aghazadeh, A. and Jebraeili, S. (2013). Investigation of the effect of renewable and non-renewable energy consumption on economic growth in selected developing countries (including Iran). Journal of Energy Economic Studies, 9(32), 51-72 (In Persian).
Furuoka, F. (2015). Electricity consumption and economic development in Asia: new data and new methods. Asianā€Pacific Economic Literature, 29(1), 102-125.
Gaspar, J., Marques, A. C. and Fuinhas, J. A. (2017). The traditional energy-growth nexus: A comparison between sustainable development and economic growth approaches. Ecological Indicators, 75, 286-296.
IEA. (2016). International Energy Agency. ,
IRENA. (2016). Renewable energy benefits: measuring the economics. IRENA, Abu Dhabi, 
Koop, G. and Korobilis, D. (2010). Bayesian multivariate time series methods foe empirical macroeconomics. Manuscript available at gary.koop/.
Maji, I.K. (2015). Does Clean Energy Contribute to Economic Growth? Evidence from Nigeria. Energy Reports, 1, 145–150.
Mezghani, I. and Haddad, H. B. (2016). Energy consumption and economic growth: An empirical study of the electricity consumption in Saudi Arabia. Renewable and Sustainable Energy Reviews, 75, 145-156.
Omri, E., Chtourou, N., and Bazin, D. (2015). Solar thermal energy for sustainable development in Tunisia: The case of the PROSOL project. Renewable and Sustainable Energy Reviews, 41, 1312-1323.
REN21. (2013). Renewables 2013 global status report, Paris,
Sahebhonar, H. and Nadri, K. (2014). The economic analysis of the oil revenues increase impact on income distribution with a BVAR approach: case study of Iran. Journal of Iranian Energy Economics, 3(9), 115-149 (In Persian).
Sebri, M. and Ben-Salha, O. (2014). On the causal dynamics between economic growth, renewable energy consumption, CO 2 emissions and trade openness: fresh evidence from BRICS countries. Renewable and Sustainable Energy Reviews, 39, 14-23.
You, J. (2011). China’s energy consumption and sustainable development: Comparative evidence from GDP and genuine savings. Renewable and Sustainable Energy Reviews, 15, 2984-2989.
Wang, Z. and Feng, C. (2015). A performance evaluation of the energy, environmental, and economic efficiency and productivity in China: an application of global data envelopment analysis. Applied Energy, 147, 617-626.
WCED, U. (1987). Our common future. World Commission on Environment and Development, Oxford University Press.