Integrated analysis of energy-economic development-environmental sustainability nexus: Case study of MENA countries

Abstract

The new industrialization necessitates the integration of energy efficiency, economic development, and environmental sustainability. However, quantifying the efficiency of renewable energy towards economic development is an ongoing debate. On this basis, this study presents a multi net-put efficiency and conventional efficiency approach to analyze non-renewable energy and renewable energy efficiency towards economic development and environmental sustainability nexus. Data Envelopment Analysis (DEA) is utilized to estimate multi net-put conventional and renewable energy efficiency. Likewise, the Autoregressive Distributed Lag (ARDL) Pooled Mean Group (PMG) approach is applied to examine the impact of non-renewable efficiency on economic growth, total natural resource rent and environmental quality. Results show that the efficiency nexus of conventional energy is significant and higher (98%) than renewable energy (69.5%) for the evaluated period (2006-2016). None-theless, conventional energy efficiency of the panel of MENA countries worsen the environmental quality, thus does not enhance environmental sustainability especially in the long-run. The results also posit that economic growth in the panel of MENA countries is detrimental to the region's environmental sustainability. Further analysis indicates that the inefficiency of renewable energy nexus has more to do with scale size inadequacy rather than operational deficiency. Therefore, resources and policies must be targeted towards up scaling renewable energy capacity accompanied with cautious and target oriented strategy.