The nexus between renewable energy, CO2 emissions, and economic growth: Empirical evidence from African oil-producing countries

Abstract

Despite Africa's reserves of renewable energy, policymakers rely on traditional energy sources to improve macroeconomic outcomes, thus contributing to global warming. We investigated the relationship between renewable energy, CO2 emissions, and growth in oil-producing Angola, Algeria, Equatorial Guinea, Egypt, Gabon, Congo Republic, Libya, Nigeria, and Sudan from 1990-2014 using a second-generation panel data analysis. Our motivation was to demonstrate Africa's growing CO2 emissions (doubled in 20 years) and influence on global warming and also influence on African oil-producing countries' growth performance. Our objective was to analyze how renewable energy and CO2 emissions contribute to economic growth. We employed a bootstrap panel LM cointegration-accounting for the horizontal cross-sectional dependency-the AMG estimator to analyze cointegration coefficients, and the country-based Konya panel causality test. Our findings showed no significant effect of renewable energy on economic growth, confirming the neutrality hypothesis. One reason may relate to the under-utilization of their renewable energy potential by these countries. The results reveal a significantly positive effect of CO2 emissions on growth for Algeria, Equatorial Guinea, and Egypt. Hence, we recommend that policymakers pay more attention to renewable energy. An extension of our research could determine the optimum mixture of renewable and traditional energy production that would guarantee economic growth while reducing global warming. (c) 2021 Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).