The environmental aspects of conventional and clean energy policy in sub-Saharan Africa: is N-shaped hypothesis valid?

Abstract

In the energy-environment literature, a handful of the advanced economies, mostly the European Union countries, have met some of the national environmental sustainability targets. Consequently, most of these countries are renewing their policies for 2040, while the African bloc largely seems to have a longer path to emerge from the woods. Giving this insight, we are compelled to draw inferences from the role of major energy sources (conventional and renewable) in the sub-Saharan Africa’s drive for environmental sustainability target. To achieve this objective, we examine the validity of an N-shaped hypothesis for subSaharan region which has received less documentation in the extant literature. Thus, this study employed the pooled mean group autoregressive distributed lag (PMG-ARDL) and Dumitrescu and Hurlin panel causality approaches as estimation techniques. Our empirical results show that conventional and renewable energy aspects respectively worsen and improve environmental quality in both short and long run. Importantly, the study establishes the validity of the N-shaped hypothesis in the two periods (short and long run) as reported by the study regression with 17.830% for GDP growth, −2.241 % for quadratic form of GDP, and 0.094% for cubic form of GDP growth, respectively, in the long run. Moreso, renewable energy shows a magnitude of −1.306% and −0.157% for short- and long-run period, respectively, on carbon dioxide emission. The implication is that environmental quality in the sub-Saharan region is potentially characterized in cycles of worse (decreased quality), improvement (better quality), and again worse (deceased quality) resulting from the significant change in the region’s economic prosperity. In addition to the ARDL approach, the causality analysis further reiterates that there is significant causality from the energy forms and economic expansion to carbon emission at least in one direction. While examining the validity of N-shaped hypothesis for the first time for Africa, the study offers policy perspective to the governments and environmental stakeholders in the panel countries, especially to re-engineer the region’s economic dynamics if the region must meet the anticipated Sustainable Development Goals 2030.