Oil Price Volatility and Renewable Energy Consumption in Nigeria

Mercy Toluwase Ayodele and Philip O. Alege
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Mercy Toluwase Ayodele: Department of Economics and Development Studies, Covenant University, Ota, Ogun State. Nigeria.
Philip O. Alege: Department of Economics and Development Studies, Covenant University, Ota, Ogun State. Nigeria.

International Journal of Energy Economics and Policy, 2021, vol. 11, issue 4, 470-478

Abstract: Oil price volatility is argued to be one of the incentives behind the rising prominence of renewable energy as a strategy to minimize oil dependence. Therefore, this study seeks to examine the impact of oil price volatility on renewable energy consumption in Nigeria from 1986-2017. A Vector Error Correction Model (VECM) was employed to achieve this objective. The variables were confirmed to exhibit a long run association. A unidirectional causality was also observed running from renewable energy consumption to oil price volatility. The impulse response function test shows that renewable energy consumption is positively influenced by oil price volatility in Nigeria. The variance decomposition result shows that real GDP causes the largest variation in renewable energy consumption amongst all the variables employed. The study recommends that public policies should be put in place to create awareness about the importance of the renewable energy sector and its potentials to lower health cost, mitigate climate change and helps Nigeria to attain energy security in the long run.

Keywords: Oil Price Volatility; Renewable Energy Consumption; Vector Error Correction Model; Nigeria (search for similar items in EconPapers)
JEL-codes: K32 P18 Q28 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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