Threshold effect of renewable and non-renewable energy consumption on economic welfare in selected countries with different energy intensities

Consumption of polluting energy against economic welfare puts the policymaker on a dilemma - achieving economic prosperity as the ultimate goal of the economy or increasing energy consumption for economic growth. The main goal of this research is to test this duality and specifically the presence of an inverted U relationship between economic welfare and energy consumption using the Feasible Generalized Least Squares method for panel data of 117 countries (77 countries with low energy intensity and 40 countries with high energy intensity) in the period of 2007-2019. Findings of the present study indicate the existence of an inverted U relationship between energy consumption and economic welfare and confirm the hypothesis of the Kuznets curve. The noteworthy point in the findings of this study is the dynamics of the general pattern of welfare by a change in energy consumption, so that for countries with low energy intensity and also renewable energy, the threshold limit of welfare is reached faster, and after that, welfare decreases at a slower rate than the upward trend of the curve. Based on this, it seems that countries can adjust the path with consistent and optimal policies and delay reaching the stage of welfare reduction.