The path to achieving environmental sustainability in South Africa: the role of coal consumption, economic expansion, pollutant emission, and total natural resources rent

Abstract

Statistics from the Intergovernmental Panel on Climate Change (IPCC) reveals that energy consumption remains the main root cause of anthropogenic greenhouse pollutant emissions because of economic expansion. Thus, the need to explore the determinants of environmental degradation in South Africa is pertinent for policymakers and stakeholders. The current study is conducted in a multivariate framework using an augmented carbon income function. The present study explores the theme under review with the inclusion of total natural resource rent as an additional variable to circumvent for omitted variable bias. To this end, annual time series data from 1970 to 2017 is employed for econometrics analysis. The study set off with investigation of stationarity properties with conventional unit root test in conjunction with Zivot-Andrews unit root test that accounts for single structural break. The Pesaran’s bounds testing techniques traces long-run equilibrium relationship between energy (coal) consumption, pollutant emission, total natural resources rent, and economic expansion over the sampled period. Empirical test from the modified Wald test detect and validate feedback causality between energy (coal) consumption and economic expansion. This is instructive to energy stakeholders and policymakers that energy is key determinant of economic growth. Furthermore, total natural resources rent shows significant contribution to pollutant emissions in South Africa. Based on the empirical results, policy direction such as adoption of new technologies and cleaner energy sources were suggested rather than fossil fuel driven economy in South Africa.