The Impact of Renewable Electricity Output on Sustainability in the Context of Circular Economy: A Global Perspective

Abstract

In this article, we investigate the impact of “Renewable Electricity Output” on the green economy in the context of the circular economy for 193 countries in the period 2011–2020. We use data from the World Bank ESG framework. We perform Panel Data with Fixed Effects, Panel Data with Random Effects, Weighted Last Squares-WLS, and Pooled Ordinary Least Squares-OLS. Our results show that Renewable Electricity Output is positively associated, among others, with “Adjusted Savings-Net Forest Depletion” and “Renewable Energy Consumption” and negatively associated, among others, with “CO2 Emission” and “Cooling Degree Days”. Furthermore, we perform a cluster analysis implementing the k-Means algorithm optimized with the Elbow Method and we find the presence of four clusters. In adjunct, we confront seven different machine learning algorithms to predict the future level of “Renewable Electricity Output”. Our results show that Linear Regression is the best algorithm and that the future value of renewable electricity output is predicted to growth on average at a rate of 0.83% for the selected countries. Furthermore, we improve the machine learning analysis with a Deep Learning approach using Convolutional Neural Network-CNN but the algorithm is not appropriate for the analyzed dataset. Less complex machine learning algorithms show better statistical results.