Assessing the Impact of Renewable Energy Consumption, Economic Growth and Foreign Direct Investment on Carbon Emission: An Empirical Study of Africa Using Dynamic Panel Data Estimations and Panel Vector Autoregression Model Impulse Response Function
Author(s)
Kingsley Anfom , Xu Xiaoyang ,
Download Full PDF Pages: 42-55 | Views: 704 | Downloads: 207 | DOI: 10.5281/zenodo.3702220
Abstract
our study adopts panel data methodologies to empirically examine the impact of renewable energy consumption per capita, GDP per capita and foreign direct investments on carbon emissions for a panel of 33 African countries for the period 2000 – 2014. The long run estimates of the variables confirm that renewable energy consumption per capita is negatively related to carbon dioxide emission; renewable energy reduces the pollution that results from carbon emission. Economic growth showed positive impact on carbon emission and foreign direct investment showed negative or an inverse relationship with carbon emissions in our samples. We recommend that the use of renewable energy consumption should be prompted in Africa in order to develop carbon free economies and also mitigate the activities of pollutants in the premise of regulations
Keywords
Carbon emission; Renewable energy consumption; Economic growth; FDI; dynamic panel estimation; impulse response function
References
i. Adewuyi, A.O., Awudomi, O.B., 2017a. Biomass energy consumption, economic growth and carbon emissions: Fresh evidence from West Africa using a simultaneous equation model. Energy 119, 453 – 471.
ii. Adewuyi, A.O., Awudomi, O.B., 2017b. Renewable and non-renewable energy-growth-emissions linkages: Review of emerging trends with policy implications. Renewable and Sustainaibility Energy Review. 69, 275 – 291.
iii. Ahmed, S., 2015. Variance Decomposition of Emissions, FDI, Growth and Imports in GCC countries: A Macroeconomic Analysis. International Journal of Management Science and Business Administration 1 (6), 118-126.
iv. Amponsah, N.Y., Troldborg M., Kington, B., Aalders, I., Hough, R.L., 2014. Greenhouse gas emissions from renewable energy sources: a review of lifecycle considerations. Renewable and Sustainable Energy Review 39, 461–475.
v. Ang, J.B., 2007. CO2 emissions, energy consumption, and output in France. Energy Policy 35 (10), 4772 – 4778.
vi. Apergis, N., Payne, J.E., 2009b. Energy consumption and economic growth: evidence from the common wealth of independent states. Energy Economics 31 (5), 641 – 647.
vii. Arvesen, A., Hertwich, E.G., 2012. Assessing the life cycle environmental impacts of wind power: a review of present knowledge and research needs. Renewable and Sustainable Energy Review 16, 5994 – 6006.
viii. Auffhammer, M., Carson, R.T., 2008. Forecasting the path of China's CO2 emissions using province−level information. Journal of Environmental Economics Management 55 (3), 229–247.
ix. Behera, S.R., Dash, D.P., 2017. The effect of urbanization, energy consumption, and foreign direct investment on the carbon dioxide emission in the SSEA (south and south East Asian) region. Renewable and Sustainable Energy Review 70, 96–106. https://doi.org/10.1016/j.rser.2016.11.201.
x. Ben Jebli, S. M., Ben Youssef, I. Ozturk., 2015b. The Role Of Renewable Energy Consumption And Trade: Environmental Kuznets Curve Analysis For Sub-Saharan Africa Countries. African Development Review 27, 288 - 300.
xi. Cheng C., Xiaohang R., Zhen W., 2019. The impact of renewable energy and innovation on carbon emission: An empirical analysis for OECD countries. Energy Procedia 158, 3506 - 3512.
xii. Chung-Ping C., Minyi D., Bo S., Yin C., 2019. Driving forces of global carbon emissions: From time- and spatial-dynamic perspectives. Economic Modelling 77, 70 - 80
xiii. Dai-Won, K., Jung-Suk, Yu, Hassan, M. K., 2018. Financial inclusion and economic growth in OIC countries. Research in International Business and Finance 43, 1 – 14.
xiv. Dong K., Sun R., Hochman G., 2017. Do natural gas and renewable energy consumption lead to less CO2 emissions? Empirical evidence from a panel of BRICS countries. Energy 141, 1466–1478.
xv. Dumitriscu, E.I., Hurlin, C., 2012. “Testing for Granger non-causality in heterogeneous panels”. Econometric modelling 2, 1450 -1460.
xvi. Grossman, G.M., Krueger, A.B., 1995. Economic growth and the environment. Quarterly Journal of Economics 110 (2), 353–377.
xvii. Furlan C., Mortarino C., 2018. Forecasting the impact of renewable energies in competition with non-renewable sources. Renewable and Sustainable Energy Review 81, 1879–1886.
xviii. Hertwich E., Gibon T., Bouman E.A., Arvesen A., Suh S., Heath G.A., Bergesen J.D., Ramirez A., Vega M.I., Shi, L., 2015. Integrated life-cycle assessment of electricity supply scenarios confirms global environmental benefit of low-carbon technologies. PNAS 112, 6277 – 6282.
xix. Hong L., Zhou N., Fridley D., Raczkowski C., 2013. Assessment of China's renewable energy contribution during the 12th Five Year Plan. Energy Policy 62, 1533–1534.
xx. Ito, K., 2017. CO2 emissions, renewable and non-renewable energy consumption, and economic growth: evidence from panel data for developing countries. Journal of International Economics151, 1 – 6.
xxi. Im, K.S., Pesaran, M.H., Shin, Y., 2003. Testing for unit roots in heterogeneous panels. Journal of Econometrics 115, 53 – 57.
xxii. Inglesi-Lotz, R., 2016. The impact of renewable energy consumption to economic growth: A panel application. Energy Economics 53, 58 – 63.
xxiii. Iwata, H., Okada, K., Samreth, S., 2010. Empirical studyon the environmental kuznet curve for CO2 in France: the role of nuclear energy. Energy Policy 38, 4057 – 4063.
xxiv. Julian K., Frauke U., 2018. Technology Transfer and Cooperation For Low Carbon Energy Technology: Analysing 30 Years of Scholarship and Proposing A Research Agenda. Energy Policy 119, 600 – 609.
xxv. Kao, C., 1999. Spurious regression and residual-based tests for cointegration panel data. Journal of Econometrics 90 (1), 1 – 44.
xxvi. Kao, C., Chiang, M.H., 2000. On the estimation and inference of a cointegrated regression in panel data. Advanced Econometrics 15, 179 – 222.
xxvii. Levin, A., Lin, C.F., Chu, C., 2002. Unit root tests in panel data: asymptotic and finite sample properties. Journal of Econometrics 108, 1 – 24.
xxviii. Lingyun H., Lihong Z., Zhangqi Z., Deqing W., Feng W., 2019. Green credit, renewable energy investment and green economy development: Empirical analysis based on 150 listed companies of China. Journal of Cleaner Production 208(20), 36 3- 372
xxix. Lingyun H., Xiaolu Z., 2018. Impact of financial development on trade-embodied carbon dioxide emissions: Evidence from 30 provinces in China. Journal of Cleaner Production 198, 721 – 736
xxx. Liu, Q., Lei, Q., Xu, H., Yuan, J., 2018. China's energy revolution strategy into 2030. Resource Conservation and Recycling 128, 78–89.
xxxi. Liu, Z., 2015.Steps to China's carbon peak. Nature 522, 279.
xxxii. Maddala, G.S., Wu, S., 1999. A comparative study of unit root tests with panel data and a new simple test. Oxford Bulletin of Economics and Statistics 61, 631 – 652.
xxxiii. Maji, I. K., 2015. Does clean energy contributes to economic growth? Evidence from Nigeria. Energy Report 1, 145 – 150.
xxxiv. Maji, I. K., Sulaiman, C., 2019. Renewable energy consumption and economic growth nexus: A fresh evidence from West Africa. Energy Report 5, 384 – 392.
xxxv. Moore J.C., Chen Y., Cui X., Yuan W., Dong W., Gao Y., Shi, P., 2016.Will China be the first to initiate climate engineering? Earth’s Future 4, 588–595.
xxxvi. Mu Y., Wang C., Cai W., 2018. The economic impact of China's INDC: distinguishing the roles of the renewable energy quota and the carbon market. Renewable and Sustainable Energy Review 87, 2055 –2966.
xxxvii. Nicholas A., Mehdi J., Slim Y., 2018. Does Renewable Energy Consumption And Health Expenditures Decrease Carbon Dioxide Emissions? Evidence for Sub-Saharan Africa Countries. Renewable Energy 127, 1011 – 1016.
xxxviii. Ozturk F. B., 2015. Biomass Energy and Economic Growth Nexus In G7 Countries: Evidence From Dynamic Panel Data. Renewable and Sustainability Energy Review 49, 132 - 138.
xxxix. Ozturk, I., Bilgili, F., 2015. Economic growth and biomass consumption nexus: Dynamic panel analysis for Sub-Sahara African countries. Applied Energy 137, 110 – 116.
xl. Pan, X.Z., Chen, W.Y., Clarke, L.E., Wang, L., Liu, G., 2017. China's energy system transformation towards the 2 °C goal: implications of different effort-sharing principles. Energy Policy 103, 116–126.
xli. Pao, H.T., Tsai, C.M., 2010. CO2 emissions, energy consumption and economic growth in BRIC countries. Energy Policy 38 (12), 7850 – 7860.
xlii. Pedroni, P., 1999. Critical values for cointegration tests in heterogeneous panels with multiple regressors. Oxford Bulletin of Economics and Statistics 61, 53 -70.
xliii. Pedroni, P., 2004. Panel cointegration: Asymptotic and finite sample properties of pooled time series tests with an application to the PPP hypothesis: New results. Economic Theory 20, 597 – 627.
xliv. Qi, T., Zhang, X., Karplus ,V.J., 2014. The energy and CO2 emissions impact of renewable energy development in China. Energy Policy 68, 60–69.
xlv. Rafindadi, A.A., Ozturk, L., 2016. Impact of renewable energy consumption on the german economic growth: Evidence from combined conitegration tests. Renewable and Sustainable Energy Review (2016), in the press.
xlvi. Saddam, A., 2014. Trade and Foreign Direct Investment: Impact on Economic Growth and Emissions in Gulf Cooperation Council Countries. Economics University of Malaya Ph.D: 374.
xlvii. Salahuddin, M., Gow, J., 2014. Economic growth, energy consumption and CO2 emissions in gulf cooperation council countries. Energy 73, 44 – 58.
xlviii. Samuel, A. S., Vladimir, S., 2019. Effects of foreign direct investments, economic development and energy consumption on greenhouse gas emissions in developing countries. Science of the Total Environment 646, 862-871.
xlix. Solarin, S.A., Al-Mulali, U., Musah, I., Ozturk, I., 2017. Investigating the pollution haven hypothesis in Ghana: an empirical investigation. Energy 124, 706–719. https://doi.org/ 10.1016/j.energy.2017.02.089.
l. Sun, C., Zhang, F., Xu, M., 2017. Investigation of pollution haven hypothesis for China: an ARDL approach with breakpoint unit root
li. Song J., Yang W., Higano Y., Wang X., 2015. Introducing renewable energy and industrial restructuring to reduce GHG emission: application of a dynamic simulation model. Energy Conversation Management 96, 625–636.
lii. Sun, X., Zhang B., Tang, X., McLellan, B.C., Höök, M. 2016. Sustainable Energy Transitions in China: renewable Options and Impacts on the Electricity System. Energies 9, 980. http://dx.doi.org/10.3390/en9120980.
liii. Toda, Y.H., Yamamoto, T. 1995. Statistical inference in vector autoregressions with possibly integrated processes. Journal of Econometric 66, 225–250.
liv. World Bank report, 2015. World bank’s world development indicators. Available at http://www.worldbank.org/. dataset.
lv. Xie H., Yu Y., Wang W., Liu Y., 2017. The substitutability of non-fossil energy, potential carbon emission reduction and energy shadow prices in China. Energy Policy 107, 63–71.
lvi. Xie, Y., Dai, H., Dong, H., 2018. Impacts of SO2 taxations and renewable energy development on CO2, NOx and SO2 emissions in Jing-Jin-Ji region. Journal of Cleaner Production 171, 1386 –1395.
lvii. Yamada, H., Toda, Y.H., 1998. Inference in possibly integrated vector autoregressive models: some finite evidence. Journal of Econometrics 86, 55–95.
lviii. Yang Z., Jintao F., Ying K., Rui W., 2018. How Foreign Direct Investment Influences Carbon Emissions, Based on the Empirical Analysis of Chinese Urban Data. Sustainability MPDI.
lix. Zapata, H.O., Rambaldi, A.N., 1997. Monte Carlo evidence on cointegration and cau-sation. Oxford Bullutin of Economics and Statistics 59 (2), 285–298.
lx. Zarsky, L., 1999. Havens, halos and spaghetti: untangling the evidence about foreign direct investment and the environment. Foreign Direct Investment and the Environment, 47-74.
lxi. Zhao X., Cai Q., Zhang S., Luo K., 2017. The substitution of wind power for coal-fired power to realize China's CO2 emissions reduction targets in 2020 and 2030. Energy 120, 164–178.
lxii. Zakarya, G.Y., Mostefa, B., Abbes, S.M., Seghir, G.M., 2015. Factors affecting CO2 emissions in the BRICS countries: a panel data analysis. Procedia Economics and Finance 26, 114–125.
lxiii. Zhang, C., Zhou, X., 2016. Does foreign direct investment lead to lower CO2 emissions? Evidence from a regional analysis in China. Renewable and Sustainable Energy Review 58, 943–951.
lxiv. Zhu, H., Duan, L., Guo, Y., Yu, K., 2016. The effects of FDI, economic growth and energy consumption on carbon emissions in ASEAN-5: evidence from panel quantile regression. Econometric Modelling 58, 237–248. https://doi.org/10.1016/j.econmod.2016.05.003.
Cite this Article: