The Effect of Renewable Energy Consumption on Economic Growth

Usage of renewable energy resources in an area can be a suitable alternative for decrease economic cost and environmental pollution and also for increase energy productivity. This study has attempted to analyze the dynamics of renewable energy consumption, economic growth in Iran. For the analysis, we used VAR approach. Results of cointegration analysis through Johansen-Juselius , shows that there is evidence of cointegration among GDP and renew able energy consumption and also between GDP and none renew able energy consumption. Results of Iran production function show that none renew able energy consumption have a stronger effect on GDP than renewable energy, but the productivity of renewable energy is high. The variance decomposition shows the share of consumption of none renewable energy source explained a significant part of the variance of Iran pollution.