The Impact of the Global Shift Toward Renewable Energy on Economic Growth in Libya: Oil Revenues as a Mediating Variable (An Econometric Study for the Period 1990–2024)

Abstract

Energy, both in production and consumption, on economic growth in Libya. The study employs the Vector Autoregression (VAR) model, along with the Granger causality test and the Toda–Yamamoto causality approach. Oil revenues are incorporated as a mediating variable to capture the indirect effect. The analysis covers the period from 1990 to 2024.The results indicate the absence of statistically significant direct or indirect effects of the independent variable and the mediating variable on the dependent variable. This outcome is attributed to the relatively small share of renewable energy in the global energy mix and the continued dominance of the hydrocarbons sector in global energy supply.The study recommends increasing the revenues generated from Libya’s hydrocarbon sector before global demand shifts significantly away from fossil fuels. At the same time, it emphasizes the need to adopt a long-term strategy that allocates a portion of oil revenues toward diversifying the production base and developing the renewable energy sector, particularly solar and wind energy, in which Libya possesses significant comparative advantages.