Environment and economic growth relationship in the context of renewable energy: The case of OECD countries

Within the scope of sustainable growth targets of countries, it is very important that they protect the environment while the countries are growing economically. However, the supply of energy which is one of the main inputs of production from fossil sources, creates some problems in terms the environment. The CO2 gas generated by fossil energy sources, creates effects such as global warming and climate change that deeply affecting the world. For this reason, it necessary to use to clean energy sources in order to use scarce resources efficently and to minimize the damage to the environment. In this context, renewable energy sources are a good alternative. The use of renewable energy is important in the relationship between environment and economic growth and reasonable level should be determined. In this study, the relationship between environment and economic growth in context of renewable energy in OECD countries is examined by using Panel Smooth Transition Regression (PSTR) model for period 1995-2018. According to the analysis results, defined as the threshold variable, the share of renewable energy use in energy consumption was found to be %7,825. In this context, when the share of renewable energy use in energy consumption occurs below the threshold level, economic growth affects the environment negatively. If it occurs above the threshold level, it is positively affected. Therefore, the widespread use of renewable energy is a solution in order to reduce environmental pollution. Accordingly, it is very important for policy makers to both emphasize and encourage energy use.