Economic Vibrancy Meets Sustainability: How Trade, Tourism, and Inflation Shape Renewable Energy in Bangladesh

This study aims to assess the effects of trade, tourism, and inflation on renewable energy consumption in Bangladesh, using data from 1995 to 2023. The long-run results indicate that trade has a positive and significant impact on renewable energy consumption, whereas tourism and inflation exert negative and significant effects. The error correction term confirms rapid adjustment to long-run equilibrium. The research utilizes the Autoregressive Distributed Lag method to estimate both short- and long-term elasticities, with robustness checks carried out using FMOLS, DOLS, and CCR. The findings reveal that trade promotes renewable energy consumption in the long run, but has a negative impact in the short run. Employing the Autoregressive Distributed Lag (ARDL) approach, the long-run results reveal that trade has a positive coefficient and significant effect on renewable energy consumption (0.158), while tourism (-0.029) and inflation (−0.632) exhibit negative and significant impacts. In the short run, trade negatively affects renewable energy (−0.283), whereas tourism (0.024) and inflation (1.026) show positive effects. Tourism negatively affects renewable energy consumption over the long term, but shows a positive effect in the short term. Similarly, Inflation has a negative influence in the long term but positively impacts renewable energy consumption in the short term. Based on these outcomes, the study proposes several policy recommendations aimed at mitigating the negative effects of trade and inflation, while maximizing the positive influence of tourism on renewable energy consumption. Finally, this study contributes to Bangladesh's progress toward achieving SDG-1, SDG-7, SDG-8, SDG-9, and SDG-12.