Abstract:
The year 2015 was widely characterized by political debates and governmental support to renewable energy. Solving the energy crisis has become a highly discussed topic and strategic goal by global leaders, concerned about political and environmental issues. Reducing dependence on fossil fuels and on fossil fuels exporters as well as addressing global warming and climate change issues are considered between the top objectives worldwide; that is the reason why researchers and scientists around the world are involved in search for such renewable energies capable to replace fossil fuels and to self-replenish over time. The boom of renewable energies worldwide has been largely possible due to growing demand for energy, new high profile agreements and dedicated polic support initiatives, ( such as better access to financing, cost-competitiveness of renewable technologies, energy security) and environmental concerns. This has resulted in improved energy efficiency and accessibility to renewable energy. Global investments in renewable energy recorded high figures, and investments in developing countries oversaw the industrialization process. Despite a drop in the global fossil fuel prices, renewable energy capacity consumption has witnessed an increasing trend, and direct and indirect employment in the renewable sector has boosted (REN21, 2016). This shows clear commitment to renewable energy deployment, strong international consensus and, even if humanity is not ready yet to abandon once for all fossil sources of energy, willingness of energy transition away from fossil fuels is under way. Among the leading countries in production and consumption of renewable energy, China is a unique case. Specifically, it appears in the top countries for hydro, solar, wind and bio-energy production and electricity consumption. China has in fact increasing need for energy caused by growing population and economic development, and ways to reduce fossil fuels dependence is crucial for the country. This thesis tries to analyze the impact of renewable energy consumption on China’s GDP per capita. The Instrumental Variable methodology is approached initially to establish a correlation between non-renewable energy prices and renewable energy consumption, and in turn GDP per capita. Further, the thesis attempts to show a causal relationship between renewable energy consumption and GDP per capita in the long run through a Vector Error Correction Model.
