A blend of renewable and nonrenewable energy consumption in G-7 countries: The role of disaggregate energy in human development

Highlights: • This study examines the impact of renewable and nonrenewable energy on human development. • G-7 countries have been analyzed for the period 1990–2015. • Globalization, urbanization and economic growth are taken as control variables. • The results reveal that both renewable and nonrenewable energy increase the human development. • The effect of renewable energy consumption is more significant as compared to nonrenewable energy. This study examines the effects of renewable and nonrenewable energy consumption in G-7 countries to discuss their role on human development. The study uses data from 1990 to 2015 and latest econometric tests to meet the study objectives. Unit root analysis conducted through Cross-Sectional Im, Pesaran, and Shin and Cross-Sectional-Augmented Dickey–Fuller, panel cointegration estimated through Lagrange multipliers bootstrap method, long-short run relationships estimated through Continuously-Updated Bias-Corrected and Continuously-Updated Fully-Modified estimators, and causality is assessed through Dumitrescu-Hurlin panel technique. Existing literature has addressed the aggregate impact of energy consumption on human development, whereas disaggregated impact has not been examined clearly. The results explain that energy consumption, urbanization, globalization, and economic growth encourage human development in G-7 countries. Bidirectional causality is also found between renewable and nonrenewable energy consumption with human development. Policymakers are suggested to improve basic infrastructure, reduce the cost of energy by lowering the price of clean energy, impose stringent environmental measures on the consumption of fossil fuels considering solar and wind energy investment tax-free. Moreover, national and local governments of G-7 countries need to become more strategic in responding to the full range of challenges and opportunities posed by rapid urbanization. It is suggested to formulate a national urbanization strategy as a first step to help to identify urban development priorities, shape plans, and better coordinate actions by all the actors involved, including the private sector. Study limitations and future research direction discussed.