Contents lists available at ScienceDirect Renewable and Sustainable Energy Reviews journal homepage: www.elsevier.com/locate/rser Electricity consumption, oil price and economic growth: Global perspective Suleman Sarwar ⁎ , Wei Chen, Rida Waheed School of Economics, Shandong University, Jinan, PR China ABSTRACT The study uses the panel data of 210 countries over the period 1960–2014 to analyze the empirical relationship between economic growth, electricity consumption, oil price, gross fixed capital formation and population. While the current literature on the topic focus largely on relationship between oil consumption and economic growth while only a few presented the research studying relationship between electricity and economic growth, we used oil price and electricity consumption, jointly, to study the highly predictive observer for economic growth. Furthermore, the data is categorized into income, OECD, regional level, renewable energy consumption level and oil export/import countries. Pedroni panel cointegration, fully modified OLS and panel vector error correction test apply to analyze the cointegration, short run and the long run relationship between the variables. The results of full panel confirm a bidirectional relationship between electricity consumption and GDP, oil price and GDP, fixed capital formation, population and GDP. Moreover, the results confirm that countries using non- renewable sources for electricity generating, such as through coal and oil, the electricity consumption of these countries exhibit a negative relationship with the economic growth. Furthermore, the finding varies across income, OECD and regional, renewable energy consumption level. 1. Introduction Bhutan: a relatively small and underdeveloped country situated between two of the world's most powerful economies: China and India. However, despite carrying little significance from the perspective of the global economy, the country is turning out to be a cynosure because of its staunch commitment towards producing renewable sources of energy and turning out to be a carbon negative nation. 1 Despite being aware of the ills of non-renewable energy, we, the humans, became more and more avaricious for economic development at the expense of pristine environment of earth [60]. In fact, our obsession for non- renewable sources of energy continue to grow despite being aware that around 75% of the energy source in these sources is wasted in the form of heat and harmful gases, such as carbon dioxide, carbon monoxide and many others. Additionally, a large portion of the remaining percentage of the energy source is lost in the distribution process (EPA, United States environmental protection agency). Be it processing or distribution, any activity related to non-renewable sources of energy, results in emission of dangerous gases, which proves calamitous for the environment and our own health. However, as more and more nations understand the importance of the environment and quality of life, i.e. Gross National Happiness is way more valuable than Gross National Product, they are now resorting towards the use of renewable resources owing to innumerable benefits these resources offer. No matter how much we may try to ignore non- renewable resources, but the ironic truth is that no economy in the present day scenario can function without the use of energy sources such as electricity or crude oil. As for electricity as a source of energy, be it a big manufacturing hub such as China or a developing one like Vietnam or Ghana, electricity is the major factor of production to initiate the manufactur- ing process and thus turn out to be the core impetus of the economic growth. A large number of studies also performed the assiduous research to analyze the impact of electricity on economic growth [1,14,45,67,68], though each of them came up with a different perspective, with the income level of the nation being the primary factor. For instance, Ferguson et al. [22] analyzed 100 countries and concluded that there is a strong relationship between electricity consumption and economic growth in wealthy countries. On the other hand, a large number of developing and underdeveloped countries have http://dx.doi.org/10.1016/j.rser.2017.03.063 Received 14 June 2016; Received in revised form 17 March 2017; Accepted 21 March 2017 ⁎ Corresponding author. E-mail address: ch.sulemansarwar@gmail.com (S. Sarwar). 1 In one of the most influential TED (Technology, Entertainment and Design) conference during 2016, the prime minister of Bhutan, discussed as how a small nation set up an example for the global economy to resort again to renewable resources and pledge to be carbon negative. One of the most traumatic fact highlighted in his speech was the fact that New York City emits more carbon in a month than what Bhutan emits in an entire year. The well know measures had taken by the government by amending the consititution. Firstly, a ban was imposed on export logging. Secondly, forest areas would not drop below 60%. Thirdly, the electricity is generated by renewable energy generation sources. Last but not the least, the government is providing zero cost electricity to the villagers for avoiding fire woods [41]. Renewable and Sustainable Energy Reviews 76 (2017) 9–18 Available online 17 March 2017 1364-0321/ © 2017 Elsevier Ltd. All rights reserved. MARK