Renewable Energy and Economic Growth in the United Arab Emirates: A Causal Analysis of CO2 Emissions and Environmental Policy Trends

Mastora Sahal Gomaa Sahal (), Zaki Ahmad (), Mohamed Ali Ali (), Nuseiba Azzam Ibrahim Yousif (), Ali Alhag Ali Mohammed () and Ahmed Mahade ()
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Mastora Sahal Gomaa Sahal: Department of Financial Management, Academic Programs for Military Colleges, Abu Dhabi University, United Arab Emirates,
Zaki Ahmad: Islamic Business School, Universiti Utara Malaysia, Sintok 06010, Kedah, Malaysia
Mohamed Ali Ali: Department of Finance, College of Business Administration in Hawtat Bani Tamim, Prince Sattam bin Abdulaziz University, Saudi Arabia,
Nuseiba Azzam Ibrahim Yousif: Department of Business Administration, Supply chain Management Specialization, Academic Programs for Military Colleges, Abu Dhabi University, United Arab Emirates,
Ali Alhag Ali Mohammed: Department of Human Resources Management, Academic Programs for Military Colleges, Abu Dhabi University, United Arab Emirates.
Ahmed Mahade: Department of Human Resources Management, Academic Programs for Military Colleges, Abu Dhabi University, United Arab Emirates.

International Journal of Energy Economics and Policy, 2025, vol. 15, issue 6, 815-822

Abstract: United Arab Emirates rapid economic expansion, environmental degradation, particularly CO? emissions, has emerged as a pressing challenge. The study explores the dynamic relationship between the utilization of renewable energy sources, CO? emissions, environmental policy, and economic growth over the period 2000-2023. Applied to yearly time-series data using Granger causality tests and the Autoregressive Distributed Lag (ARDL) model, the research identifies both immediate and long-term variations in equilibrium among the variables. The stationary nature of the variables at the first difference or degree was validated by the Augmented Dickey-Fuller (ADF) test, satisfying ARDL prerequisites. Testing for ARDL boundaries showed considerable long-term cointegration, demonstrating how these variables change in tandem over time. GDP is positively impacted by using renewable energy in a statistically significant way over the long run (coefficient = 0.275) and short term (coefficient ? 0.112), according to the data. CO? emissions exert a negative influence on long-term economic growth (coefficient ? -0.190). Environmental policy contributes positively to growth, reinforcing the role of governance in green transitions. Granger causality analysis further confirms that renewable energy and environmental policy unidirectionally influence GDP, whereas GDP and CO? emissions share a bidirectional feedback loop. These results highlight the crucial role of sustainable energy strategies and regulatory frameworks in supporting long-term economic resilience. For policymakers, the study offers actionable insights into how green investments and emission controls can reinforce development goals. Future research should consider sector-level disaggregation and integrate high-frequency or regional comparative datasets to refine policy analysis and advance GCC-wide sustainability efforts.

Keywords: Renewable Energy; Economic Growth; CO2 Emissions; Environmental Policy; ARDL Model; United Arab Emirates (search for similar items in EconPapers)
Date: 2025
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DOI: 10.32479/ijeep.21247

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