Abstract:

This study examines the short and long-run relationships among economic growth, financial development, investment, and electricity consumption during the period between 1975 and 2018 for Qatar. We conducted the Autoregressive Distributed Lag (ARDL) cointegration test and Vector Error Correction Model to propose comprehensive policy recommendations. The findings support the validity of the conservation hypothesis for the energy-growth nexus, and thereby energy use reduction has an insignificant impact on the growth. We recommended policies aiming to reduce household energy use and country-wide AC usage. In this regard, financial subsidies in energy and water consumption should be reduced further, even abolished, to lower the waste use of energy and prevent extravagant water use distilled from seawater by natural gas-powered desalination plants. Policymakers should also consider proactive and incentivizing strategies for cooling electricity load control and demand-side management of cooling in summers. This might enable leveling out peaks in electricity use, and hence reduce redundant power generation and cost.

Keywords: