Unveiling the Nexus Between Energy Consumption and Economic Growth in Ethiopia: Pathways to Sustainable Development

This study examines how energy consumption influences Ethiopia’s economic growth, focusing on its implications for sustainable development. It analyses the mediating role of energy efficiency and the moderating effect of renewable energy adoption. Using a quantitative design and data from 403 energy-related firms, the findings reveal that energy use significantly drives economic performance, with energy efficiency serving as a key moderating factor enhancing sustainability. The objective is to assess how improvements in energy consumption and efficiency drive economic productivity, while the adoption of renewable energy enhances sustainability. The quantitative research approach was used in the investigation. Structured questionnaires were used to gather data from 403 energy-related businesses. Results show that economic growth is significantly impacted by energy use, with energy efficiency acting as a crucial moderator. Furthermore, by reducing the negative economic and environmental cost of non-renewable energy, renewable energy eliminates this connection. Improved energy efficiency, for example, boosts economic production, while consuming renewable energy enhances long-term growth by lessening the burden on the environment. These findings highlight the urgent need for Ethiopia to diversify its energy resource base, prioritising renewable sources such as wind, solar, and hydroelectric power. Policymakers are invited to encourage technological innovation and infrastructure development to improve energy efficiency, invest in renewable energy sources, and promote fair access to energy. Through combining energy policy with sustainability goals, this study emphasises the fundamental role of energy in Ethiopia’s future economic stability and environmental sustainability.