The Impact of Renewable Energy Consumption on Economic Growth: Evidence from Countries along the Belt and Road

Abstract

To mitigate the adverse effects of climate change, the structure of global energy consumption has changed, and renewable energy consumption has increased rapidly, which may have a new impact on sustainable economic development. Against this backdrop, this paper investigates the direct and indirect effects of renewable energy consumption on economic growth, utilizing panel data from 90 countries along the Belt and Road between 2000 and 2019. Employing Granger causality tests and mediating effect models, we detect a bidirectional causal relationship between renewable energy consumption and economic growth, further affirming the feedback hypothesis. Our findings show that renewable energy consumption directly contributes to economic growth. Additionally, we found that renewable energy consumption has an indirect influence on economic growth via its impact on gross capital formation and trade. Drawing on these findings, we offer practical recommendations for the Belt and Road countries to implement appropriate countermeasures.

1. Introduction

In recent years, the Belt and Road Initiative (BRI) has played a significant role in promoting the development of renewable energy in participating countries. Due to the negative impact of climate change, the structure of global energy consumption has changed, the need for clean and sustainable energy has become more urgent, and levels of renewable energy consumption have started to grow rapidly worldwide. The BRI has recognized this need and is investing heavily in renewable energy infrastructure, such as solar and wind power, along the routes. According to the Renewable Capacity Statistics 2023 report published by The International Renewable Energy Agency (https://www.irena.org/Data, accessed on 24 May 2023), the global installed renewable energy power capacity as of 2022 was 3,371,792.61 MW, of which the Belt and Road Initiative countries accounted for 1,528,228.52 MW, representing 45.32% of the world’s installed renewable energy power capacity. Since 2000, the average annual growth rate of renewable energy generation in the countries along the Belt and Road reached 3.32%, and in 2020, the renewable energy generation in the countries along the Belt and Road will account for 41.00% of the world’s energy. The rapid growth of renewable energy consumption not only furthers the modernization of the energy sector but also helps countries along the Belt and Road to achieve their economic development and sustainable development goals (Kaygusuz 2007; Namahoro et al. 2021) [1,2].

With the major transformation in the global energy landscape, important emerging economies and large developing countries, represented by countries along the Belt and Road, have become the main global energy consumers. According to the BP World Energy Statistical Yearbook 2022, the renewable energy consumption of countries along the Belt and Road accounted for 64% of the world’s energy in 2021. Consequently, it is essential to examine and highlight the relationship between renewable energy consumption and economic growth in Belt and Road countries in order to promote both sustainable economic development and renewable energy development on a global scale.

The transformation of the global energy system is one of the major trends in the current world development, which brings opportunities and challenges for economic development (Jenniches 2018) [3]. Most of the existing relevant literature analyzes the direct impact of renewable energy consumption on economic growth, studying the direct relationship between energy consumption and economic growth. Ivanovski et al. (2021) [4] examined the relationship between renewable energy consumption and economic development in OECD and non-OECD organizations and found that renewable energy consumption boosts economic growth in non-OECD countries, but has almost no effect on OECD countries. Acaroğlu and Güllü (2022) [5] found in their study on Turkey that an increase in renewable energy consumption contributes to reductions in temperature and has a positive impact on economic growth. In their study of renewable energy consumption and economic development in EU countries, Tutak and Brodny (2022) [6] found that renewable energy consumption has a positive impact on economic growth while ignoring the indirect impacts of renewable energy consumption on economic growth. Based on this background, this study intends to analyze the impact of renewable energy consumption on economic growth in terms of both indirect and direct effects using a mediation model to analyze the indirect effect between renewable energy consumption and economic growth while using Granger causality tests to analyze the direct effect between the two.

The marginal contributions of this paper can be summarized in two main points: first, we highlight that countries along the Belt and Road have emerged as significant global energy consumers, particularly in the context of renewable energy consumption. Hence, it is crucial to pay attention to the relationship between renewable energy consumption and economic growth in these countries towards promoting sustainable global economic development and renewable energy development. Second, the paper applies innovative methods to not just analyze the direct impact of renewable energy consumption on economic growth but also explore its indirect impact. Thus, this paper contributes to the ongoing academic research and discussion on renewable energy and economic growth and provides valuable insights for future research and policy making.

The remainder of this paper is divided into four sections. Specifically, an overview of the relevant literature is presented in Section 2, the data sources and model settings of this paper are introduced in Section 3, an empirical analysis and discussion of the issue are presented in Section 4, and lastly, Section 5 provides a summary of the research findings, accompanied by implications for policy makers and future research prospects.

2. Literature Review

Along with the growing global consumption of renewable energy and the emphasis on energy transition brought about by climate change, the study of the relationship between renewable energy consumption and economic growth has started to emerge in academia. Discussions in the literature regarding the relationship between renewable energy consumption and economic growth can be classified by growth hypothesis, conservation hypothesis, feedback hypothesis, and neutrality hypothesis (Šimelytė and Dudzevičiūtė 2017) [7]. Sebri (2015) [8] conducted a quantitative synthesis of the literature on the relationship between renewable energy and economic growth using meta-analysis, and the results of the study found that 32.6% of all studies proved that the feedback and conservation hypothesis was confirmed in 12.6% of the analyzed cases, and 27.4% of the studies proved the neutrality hypothesis and the growth hypothesis. Dogan (2016) [9] argues that the different findings resulted from the fact that the research methods used are not widely adopted and that most of the existing studies used total energy consumption; therefore, the influence of renewable and non-renewable energy consumption on economic growth could not be determined.

The growth hypothesis assumes a unidirectional causality between renewable energy consumption and economic growth, i.e., an increase in renewable energy consumption will promote economic growth and vice versa. For example, Inglesi-Lotz (2016) [10] added capital formation, number of employees, and R&D variables to their study on the relationship between renewable energy consumption and economic growth from 1990 to 2010 in OECD countries. The study found that renewable energy consumption, or its share in total energy consumption, has a positive impact on economic growth. Boontome et al. (2017) [11], in their study on Thailand, on the other hand, considered the impact of non-renewable energy consumption and per capita CO₂ and found that renewable energy consumption can lead to a greener economy. Chen et al. (2020) [12] considered labor variables in a study of 103 OECD countries from 1995 to 2015 and showed that the consumption of renewable energy has no effect on economic growth in developed countries and has a threshold effect on developing countries.

The conservation hypothesis assumes a unidirectional causality between economic growth and renewable energy consumption, i.e., that economic growth has a catalytic effect on increased renewable energy consumption and that energy efficiency policies do not lead to economic decline (Menegaki and Tugcu 2016) [13]. For example, Zeb et al. (2014) [14] studied the case of SAARC countries and considered the relationship between renewable energy electricity generation and economic growth and poverty. The results of the study showed that Sri Lanka’s GDP had a unidirectional causal relationship with renewable energy consumption during the period between 1975 and 2010. Ben Jebli and Ben Youssef (2015) [15] found a short-term unidirectional causality between GDP and renewable energy consumption in a study of Tunisian data between 1980 and 2009. Furuoka (2017) [16] studied the relationship between renewable electricity consumption and economic development in Estonia, Latvia, and Lithuania between 1992 and 2011 and found that economic growth leads to the expansion of renewable electricity consumption, but not vice versa.

The feedback hypothesis suggests a two-way causal relationship between renewable energy consumption and economic growth, i.e., that renewable energy consumption has an impact on economic growth and that changes in economic growth also affect renewable energy consumption. For example, Lin and Moubarak (2014) [17] studied the relationship between renewable energy consumption and economic growth in China from 1977 to 2011, in which they included carbon dioxide emissions and labor variables, and the results of their analysis showed a two-way long-term causal relationship between renewable energy consumption and economic growth. Shahbaz et al. (2015) [18] used data from 1972 to 2011 to investigate the relationship between renewable energy consumption and economic growth in Pakistan. The causal analysis of the study on the relationship between renewable energy consumption and economic growth shows that the relationship between economic growth and renewable energy consumption is consistent with the feedback hypothesis. Koçak and Şarkgüneşi (2017) [19] explored the relationship between renewable energy consumption and economic growth in nine Black Sea and Balkan countries from 1990 to 2012, with the inclusion of gross fixed capital formation and labor participation rate variables in their model and the results of their study supported the feedback hypothesis.

The neutral hypothesis assumes that there is no causal relationship between renewable energy consumption and economic growth, i.e., a decline in renewable energy consumption has no effect on economic growth, and changes in economic growth have no effect on renewable energy consumption. Menegaki (2011) [20] conducted an empirical study of the causal relationship between economic growth and renewable energy consumption in 27 European countries from 1997 to 2007, and the empirical results did not prove a causal relationship between renewable energy consumption and economic growth, supporting the neutrality hypothesis. Marques and Fuinhas (2012) [21] analyzed panel data for 24 European countries while factoring the effects of coal, oil, gas, and nuclear energy on electricity generation into their model, and their results of the study showed no clear link between renewable energy consumption and economic growth. Omri et al. (2015) [22] conducted a dynamic joint cubic equation panel data model analysis for 17 developed and developing countries and found that there is no causal relationship between renewable energy consumption and economic growth in Finland, Hungary, India, Japan, Switzerland, and the UK.

Based on the above analysis, most of the existing studies consider the relationship between renewable energy consumption and economic development in a single country or OECD organization and mostly focus on the direct relationship between the two, meaning that the relationship between renewable energy consumption and economic development in countries along the Belt and Road has largely went unexplored. Therefore, to fill the gaps in the existing literature, the considerations made by the present study are two-fold. Firstly, the Belt and Road Initiative covers many countries and their renewable energy consumption accounts for a larger proportion of the world; therefore, studying the relationship between their renewable energy consumption and economic development can help promote the sustainable development of the world economy. Secondly, most existing studies have considered the direct relationship between renewable energy consumption and economic development but ignored the fact that renewable energy consumption affects economic development in other ways. In summary, it is of great practical significance to study the direct and indirect influence of renewable energy consumption on economic development in countries along the Belt and Road.

3. Materials and Methods

3.1. Model Setting

Different research methods and subjects can lead to different results when studying the relationship between economic growth and renewable energy consumption (Šimelytė and Dudzevičiūtė, 2017) [7]. Previous studies, in order to establish the relationship between renewable energy and economic growth, have used autoregressive distributional lag methods (Cherni and Essaber Jouini, 2017) [23], Granger causality tests (Alsaleh and Abdul-Rahim, 2021) [24], FMOLS (Rahman and Velayutham, 2020) [25], DOLS (Fei et al. 2011) [26], PVAR (Charfeddine and Kahia, 2019) [27], and GMM (Justice et al. 2021) [28]. We did consider all of the above-listed methods, but most of these methods have been used to study the direct role of variables in enhancing the relationship between renewable energy consumption and economic growth while ignoring their indirect role. Therefore, in order to fill the research gap in this area and to understand the direct and indirect utility generated by the variables used in the study, this paper analyzes the direct and indirect relationship between renewable energy consumption and economic growth using Granger causality tests and mediation models based on Gyimah et al. (2022) [29]. This paper incorporates factors of production that impact economic growth, specifically renewable energy consumption, capital, labor, trade, and foreign direct investment, into the Cobb–Douglas production function to construct a long-term equilibrium production function that can be expressed by the following formula:

$$gd{p}_{it}={\alpha }_0+{\alpha }_{1}r{e}_{it}+{\alpha }_{2}ca{p}_{it}+{\alpha }_{3}la{b}_{it}+{\alpha }_{4}fd{i}_{it}+{\alpha }_{5}tr{d}_{it}+{\epsilon }_{it}$$

(1)

where is $gdp$ is gross domestic product; $re,cap,lab,fdi,trd$ are the renewable energy consumption, capital stock, foreign direct investment, total trade, and labor force, respectively. ${\alpha }_0$ are constants, ${\alpha }_{1-5}$ is the value of the coefficient, $\epsilon$ is the error term, $i$ is the country, and $t$ is the time.

This paper involves four mediating variables. In reality, gross capital formation is mainly concerned with a country’s fixed assets and inventories, and with the continuous promotion of the Belt and Road Initiative, the increasingly close cooperation on renewable energy projects between countries may have some impact on gross capital formation. At the same time, renewable energy consumption may generate new labor jobs and also have an impact on the traditional energy sector, with a dampening effect on the labor market. Trade and foreign direct investment are one of the pillars of a country’s economic growth, and renewable energy consumption has been proven to have an impact on economic growth through trade and foreign direct investment (Gyimah et al. 2022) [29]. Based on the above analysis, the mediating effect model of renewable energy consumption and mediating variables is constructed as follows:

$$ca{p}_{it}={\alpha }_0+{\alpha }_{1}r{e}_{it}+{\epsilon }_{it}$$

(2)

$$fd{i}_{it}={\alpha }_0+{\alpha }_{1}r{e}_{it}+{\epsilon }_{it}$$

(3)

$$tr{d}_{it}={\alpha }_0+{\alpha }_{1}r{e}_{it}+{\epsilon }_{it}$$

(4)

$$la{b}_{it}={\alpha }_0+{\alpha }_{1}r{e}_{it}+{\epsilon }_{it}$$

(5)

$$\left\{\begin{array}{l}gd{p}_{it}={\alpha }_0+{\alpha }_{1}r{e}_{it}+{\alpha }_{2}ca{p}_{it}+{\epsilon }_{it}\\ gd{p}_{it}={\alpha }_0+{\alpha }_{1}r{e}_{it}+{\alpha }_{2}fd{i}_{it}+{\epsilon }_{it}\\ gd{p}_{it}={\alpha }_0+{\alpha }_{1}r{e}_{it}+{\alpha }_{2}tr{d}_{it}+{\epsilon }_{it}\\ gd{p}_{it}={\alpha }_0+{\alpha }_{1}r{e}_{it}+{\alpha }_{2}la{b}_{it}+{\epsilon }_{it}\end{array}\right.$$

(6)

3.2. Data and Variables

In order to examine the relationship between renewable energy consumption and economic growth in countries along the Belt and Road, taking into account data availability and scientific validity, this paper selects gross domestic product (gdp), renewable energy consumption (re), gross capital formation (cap), labor force participation rate (lab), trade (trd), foreign direct investment (fdi) as panel data samples for 90 countries along the Belt and Road from 2000 to 2019, and the data are obtained from the World Bank database (https://datacatalog.worldbank.org/search/dataset/0037712, accessed on 19 May 2023).

Specifically, $gd{p}_{it}$ is presented as a percentage using GDP growth rates from the World Bank database. $r{e}_{it}$ is selected from the World Bank database for the share of renewable energy consumption in total energy consumption and is presented as a percentage. The renewable energy consumption is derived from the sum of renewable energy sources such as hydropower, wind, solar, bioenergy, geothermal, and tidal energy. $ca{p}_{it}$ is selected from the World Bank database for gross capital formation as a share of GDP and presented as a percentage. $la{b}_{it}$ is selected from the World Bank database for the share of the total employed population aged 15–64 (International Labor Organization estimates) and presented as a percentage. $tr{d}_{it}$ is presented in percentage form using the World Bank database for trade as a share of GDP. $fd{i}_{it}$ uses net FDI inflows as a share of GDP from the World Bank database and is presented as a percentage. The descriptive statistics of each variable are shown in

Table 1. Descriptive Statistics.

Variables	Obs	Mean	Min	Max	Std Dev
gdp	1800	3.81	−36.66	53.38	4.37
re	1800	33.71	0.05	98.34	28.89
cap	1800	23.78	4.56	79.40	7.83
lab	1800	67.53	41.53	90.34	9.87
trd	1800	84.90	19.56	442.62	46.41
fdi	1800	5.83	−40.09	279.35	15.01

.

4. Results and Discussion

4.1. Stationary Test

Unit root tests for economic growth, renewable energy consumption, and mediating variables of countries along the Belt and Road can determine their smoothness and avoid pseudo-regression. In this paper, the results of the unit root test are obtained by using LLC test, HT test, and IPS test, and the results are shown in

Table 2. Unit root test for panel data variables.

Variables	LLC Test	HT Test	IPS Test
gdp	−10.0985 ***	0.0847 ***	−3.6571 ***
re	−6.6526 ***	0.6250 **	−2.0164 ***
cap	−7.3561 ***	0.5840 ***	−2.1772 ***
fdi	−5.1724 ***	0.2644 ***	−3.0325 ***
trd	−9.1163 ***	0.8214 ***	−2.1856 ***
lab	−3.9656 ***	0.7516	−1.4256
d_lab	−9.2076 ***	0.1927 ***	−3.3619 ***

** p < 0.05. *** p < 0.01.

. The results in Table 2 show that the data of all variables are smooth except for labor participation rate, and the test is performed again by using d_lab after determining the first-order difference of lab variables, which tends to be smooth overall and meets the requirement of panel data cointegration.

4.2. Co-Integration Test

The cointegration test, which includes the Pedroni test, the Kao test, and the Fisher test, is selected in this paper to assess the long-run equilibrium of panel data, and the test results are shown in

Table 3. Results of Kao cointegration test for panel data.

	Statistic	p-Value
Modified Dickey–Fuller t	−22.5972	0.0000
Dickey–Fuller t	−22.8395	0.0000
Augmented Dickey–Fuller t	−16.3286	0.0000

. The panel cointegration results show that the Kao test data are significant and the alternative hypothesis is accepted, that is, there is a long-run cointegration relationship between economic growth, renewable energy consumption, and mediating variables in the countries along the Belt and Road.

4.3. Correlation Test

Table 4. Correlation test results.

	gdp	re	cap	fdi	trd	lab
gdp	1.0000
re	0.0279	1.0000
cap	0.2210	−0.2060	1.0000
fdi	0.0260	−0.1304	0.0905	1.0000
trd	0.0551	−0.3045	0.1445	0.2936	1.0000
lab	−0.0058	0.2098	−0.0424	0.0700	0.0347	1.0000

shows the correlation between the variables. Renewable energy consumption is weakly positively correlated with economic growth (0.0279), negatively correlated with gross capital formation (−0.2060), foreign direct investment (−0.1304), and trade (−0.3045), and positively correlated with labor force participation rate (0.2098). In addition, economic growth positively correlates with gross capital formation, foreign direct investment, and trade, and weakly negatively correlates with labor force participation rate.

4.4. Granger’s Causality Test

Table 5. Results of Granger’s causality test.

H0	HPJ Wald Test	Probability
re does not Granger-cause gdp	22.9155	0.0000 ***
gdp does not Granger-cause re	13.2633	0.0013 ***
cap does not Granger-cause gdp	3.2175	0.2001
gdp does not Granger-cause cap	29.2912	0.0000 ***
fdi does not Granger-cause gdp	1.0555	0.5899
gdp does not Granger-cause fdi	11.4923	0.0032 ***
trd does not Granger-cause gdp	6.1743	0.0456 **
gdp does not Granger-cause trd	74.4947	0.0000 ***
lab does not Granger-cause gdp	11.2129	0.0037 ***
gdp does not Granger-cause lab	8.2595	0.0161 **
cap does not Granger-cause re	15.5383	0.0004 ***
re does not Granger-cause cap	62.5359	0.0000 ***
fdi does not Granger-cause re	0.0255	0.9873
re does not Granger-cause fdi	0.7500	0.6873
trd does not Granger-cause re	0.7246	0.6961
re does not Granger-cause trd	34.3561	0.0000 ***
lab does not Granger-cause re	2.8121	0.2451
re does not Granger-cause lab	20.0669	0.0000 ***
fdi does not Granger-cause cap	9.3881	0.0091 ***
cap does not Granger-cause fdi	7.4801	0.0238 **
trd does not Granger-cause cap	8.0214	0.0181 **
cap does not Granger-cause trd	77.2246	0.0000 ***
lab does not Granger-cause cap	32.0919	0.0000 ***
cap does not Granger-cause lab	19.0178	0.0001 ***
trd does not Granger-cause fdi	6.1098	0.0471 **
fdi does not Granger-cause trd	2.3482	0.3091
lab does not Granger-cause fdi	10.4241	0.0055 ***
fdi does not Granger-cause lab	11.6017	0.0030 ***
lab does not Granger-cause trd	23.9146	0.0000 ***
trd does not Granger-cause lab	0.2927	0.8638

** p < 0.05. *** p < 0.01.

shows the results of Granger causality test. The results indicate that the feedback hypothesis between renewable energy consumption and economic growth is satisfied, i.e., renewable energy consumption drives economic growth, while economic growth boosts renewable energy consumption. This result is supported by the study of Apergis and Payne (2010) [30], whose results indicated a bidirectional causality between renewable energy consumption and economic growth in OECD countries in both the short and long run. Alam and Murad (2020) [31], Bilgili and Ozturk (2015) [32], Lin and Moubarak (2014) [17], among others, similarly prove the feedback hypothesis between renewable energy consumption and economic growth.

The results further indicate that economic growth has a unidirectional promotional effect on gross capital formation and foreign direct investment. The relationship between gross capital formation and economic growth is supported by the study of Topcu, Altinoz, and Aslan (2020) [33], which found a unidirectional causal relationship between gross capital formation and economic growth in their study of the relationship between gross capital formation and economic growth in 124 countries. However, the results of foreign direct investment differ from the findings of Saidi et al. (2020) [34] and Osei and Kim (2020) [35], as their studies concluded that foreign direct investment also has a catalytic effect on economic growth. A possible reason for this is that most of the countries along the Belt and Road are developing countries with low foreign direct investment; hence, they need economic growth to stimulate foreign direct investment. In addition, economic growth has a two-way causal relationship with trade and labor participation rate. Trade openness is one of the pillars of economic growth in each country because it facilitates the flow of goods, services, and technology—a result supported by Gyimah et al.’s (2022) [29] study on Ghana, which showed that openness to trade contributed to economic growth in Ghana.

Additionally, the results show that renewable energy consumption has a two-way causal relationship with gross capital formation, a one-way causal relationship with trade and labor productivity, and no causal relationship with foreign direct investment. Total capital formation and foreign direct investment, trade, and labor participation rate have a two-way causal relationship. Trade has a unidirectional causal relationship with foreign direct investment. Foreign direct investment has a two-way causal relationship with labor force participation rate. Labor participation rate has a unidirectional causality on trade.

4.5. Direct and Indirect Effects Test

Table 6. Direct and total effects.

Path	Effect	SE	t	p
re→cap	−0.056	0.006	−8.927	0.0000 ***
re→fdi	−0.061	0.012	−4.893	0.0000 ***
re→trd	−0.413	0.036	−11.582	0.0000 ***
re→lab	0.083	0.008	10.012	0.0000 ***
re→gdp	0.014	0.004	3.791	0.0000 ***
cap→gdp	0.129	0.013	9.868	0.0000 ***
fdi→gdp	0.001	0.007	0.161	0.872
trd→gdp	0.005	0.002	1.99	0.047 **
lab→gdp	−0.008	0.01	−0.757	0.449
Total effect re	0.004	0.004	1.182	0.237

** p < 0.05. *** p < 0.01.

shows the direct and total effects of renewable energy consumption on mediating variables and economic growth. The results of the study indicate that renewable energy consumption has a direct significant effect on economic growth, gross capital formation, foreign direct investment, trade, and labor participation rate (p = 0.000). Foreign direct investment and labor participation rate as mediators have no significant direct effect on economic growth (p = 0.872, 0.449, respectively), but gross capital formation and trade have significant direct effects on economic growth (p = 0.000, 0.047, respectively).

Table 7. Impact pathways and indirect effects.

Path	Effect	SE	BootLLCI	BootULCI	Indirect Effects
re→cap→gdp	−0.007	0.011	−0.072	−0.027	50.26%
re→fdi→gdp	0	0.004	−0.008	0.006	0
re→trd→gdp	−0.002	0.006	−0.024	−0.001	16%
re→lab→gdp	−0.001	0.007	−0.019	0.008	0

shows the impact path of renewable energy consumption on economic growth. From Bootstrap 95% confidence interval, it is clear that renewable energy consumption has an indirect impact on economic growth through gross capital formation, as proven by an indirect utility of 50.26%. It also has an indirect impact on economic growth through trade, as evidenced by an indirect utility of 16.00%. However, renewable energy does not have an indirect impact on economic growth through foreign direct investment and labor participation rate.

5. Conclusions

This study analyzed data from 2000 to 2019 for 90 countries along the Belt and Road to investigate the direct and indirect utilities between renewable energy consumption and economic growth using Granger causality tests and mediating effects models. The results of the Granger causality tests indicate that there is a bidirectional causal relationship between renewable energy and economic growth in countries along the Belt and Road, supporting the feedback hypothesis. In addition, economic growth has the same two-way causal relationship with trade and labor participation rate, but gross capital formation and foreign direct investment have no significant effect on economic growth.

The results of the intermediate effect model indicate that renewable energy consumption has a direct and significant effect on economic growth, gross capital formation, labor force participation rate, foreign direct investment, and trade. Only gross capital formation and trade have a direct and significant effect on economic growth. In terms of the influence path, renewable energy consumption can have an indirect influence on economic growth through gross capital formation and trade, with the indirect utility of gross capital formation reaching 50.26%. Renewable energy consumption cannot affect economic growth through foreign direct investment and labor participation rate.

This study provides a theoretical basis for the countries along the Belt and Road to trade-off between renewable energy consumption and economic growth. Based on the findings of this paper, the following recommendations are made: First, strengthen the international cooperation of renewable energy in countries along the Belt and Road, promote international project cooperation of renewable energy with the help of national mechanisms, increase international trade exports of renewable energy, and promote sustainable economic development. Secondly, strengthen the regional cooperation of Belt and Road countries, establish different cooperation projects according to the actual situation of different countries according to local conditions, and seize the strategies of regional cooperation organizations such as China-Pakistan Economic Corridor, China-Myanmar-India Economic Corridor, South China Peninsula Economic Corridor, Forum on China-Africa Cooperation, and China-Central Asia-West Asia Economic Corridor to promote renewable energy cooperation. Finally, countries along the Belt and Road can adopt the “investment plus industry plus operation” model to promote the development of new energy industries such as hydropower, nuclear energy, photovoltaic, wind, solar energy, etc., to promote domestic capital accumulation and international trade development, and, as a result, promote economic growth.

In future research, scholars may consider the short-term equilibrium relationship between renewable energy consumption and economic growth, and since wind and solar energy are gradually becoming one of the main renewable energy sources for sustainable development [36], the relationship between renewable energy consumption and economic growth in different areas can be studied by subdividing renewable energy consumption in future studies.