Do Clean Fuel and Renewable Energy Consumption Lead to Sustainable Economic Development: A Small Island Developing States Perspective

Economic progress is impossible without energy consumption. However, the use of energy has had devastating consequences on the environment. Indeed, the global carbon dioxide levels and greenhouse gas concentrations have been growing at an alarming rate and reaching record highs over the last few decades. This has consequently led to detrimental changes, including severe changes in weather patterns, rising sea levels, lengthening of dry seasons, and soaring temperatures. In an attempt to limit those environmental challenges, countries are now being urged to shift toward the adoption of environmentally friendly energy sources, such as clean fuel and renewable energy. Although Small Island Developing States (SIDS) do not contribute too much to greenhouse gas emissions, they still face unique, immediate, and acute environmental risks given their intrinsic nature and characteristics. As such, this chapter aims to assess the impact of renewable energy consumption (REC) and access to clean fuel and technologies (CFT) on sustainable economic growth in a sample of 21 SIDS, with data spanning over the period 2000–2021. A dynamic panel Vector Autoregressive (VAR) Model is adopted. The results demonstrate that both the consumption of renewable energy and access to CFT negatively and significantly affect the economic development of the SIDS.