Greening the Industrial Agenda: The Role of Renewable Energy Consumption in Accelerating the Growth of Kenya’s Manufacturing Sector

Abstract

This study aimed to investigate the impact of renewable energy usage on Kenya’s manufacturing and industrial sectors. It emphasizes the sector’s transition toward green manufacturing and industrial growth. The study made use of annual time series data for the period 1985-2023. It employed the ARDL framework, guided by the AIC criterion and the ECM to capture both short-run and long-run dynamics amongst the variables. The ARDL findings revealed that the use of renewable energy has immediate positive impacts on manufacturing output and productivity. The lagged effects emerge over multiple periods, implying the gradual integration of renewable energies into the production processes. On the other hand, non-renewable energy consumption has delayed negative effects, thus highlighting the shortcomings that come with the usage of non-renewable energies. Labour has a strong positive influence on output, whereas gross capital formation shows a long-lag positive impact. This shows the extended gestation periods of capital-intensive projects. The ECM results confirm that deviations from long-run equilibrium are corrected at a moderately fast rate of about 52% annually. The F-bounds test found the existence of a long-run association between renewable energy consumption and manufacturing and industrial output. These results emphasize the importance of renewable energy uptake, efficient capital deployment and labour utilization in driving sustainable manufacturing and industrial growth in Kenya. This study provides policymakers and industry stakeholders with empirical guidance for aligning energy policy, investment and technological adoption with Kenya’s broader objectives for green industrialization. This will ensure countries not only grow economically, but also grow sustainably since renewable energies have the capability of taking care of both the current and future energy needs without fear of depletion, while also ensuring environmental sustainability. This study, therefore, highlights that renewable energy consumption significantly supports Kenya’s manufacturing sector growth and recommends aligning industrial energy policy interventions with green growth and sustainability frameworks such as Vision 2030 and SDG 9 by promoting clean energy adoption, energy-efficient technologies and renewable energy integration within industrial value chains so as to enhance competitiveness and low-carbon industrial transformation.