The effect of renewable energy on Green Economy Development: evidence from the Ethiopian economy running from the year 1990 to 2022

Currently, there is a rapidly growing interest in modern clean energy generation in Ethiopia as a means to ensure economic and environmental sustainability. However, there is still a gap in empirical research addressing how investment in modern clean energy determines the development of a green economy in Ethiopia. This study examined the implication of renewable energy on green economy development in Ethiopia, specifically focusing on the relationship between modern clean energy consumption, economic growth, and environmental quality from 1990 to 2022. The study utilized annual time series data from the World Development Indicators (WDI), the Global Carbon Atlas (GCA), and the International Energy Agency (IEA). The auto regressive distributed lags (ARDL) econometric estimation technique was used to analyze the data. The findings revealed that the use of non-renewable energy, biomass, and modern clean energy were significant factors in explaining the variation in carbon dioxide emissions in Ethiopia. However, only contemporary clean energy demonstrated statistical significance in explaining long-term economic growth. The results suggest that the use of green energy sources, such as hydro, wind, and solar energy, can eventually lower carbon emissions while increasing output. It is recommended that Ethiopian authorities prioritize the promotion of renewable energy sources to prevent the economy from becoming more carbon-intensive in the future. This requires strong collaboration among policymakers, the government, and international cooperation organizations to boost investment in modern clean energy and ensure environmentally and economically sustainable development.