Industrialization and CO2 Emissions in Sub-Saharan Africa: The Mitigating Role of Renewable Electricity

Abstract

This study aims to explore the relationship between industry value added, renewable energy, and CO2 emissions in a sample of 44 Sub-Saharan African countries over the period 2000–2015. This study makes several important contributions to extant research. While existing research was focused on the renewable energy-CO2 emissions nexus, the current study assesses the moderating role of the renewables sector in the industrialization-CO2 emissions relationship. In addition, this study considers whether EKC relationships will hold after accounting for structural transformations (including industrial contributions to GDPs). Moreover, we are revising the existence of the EKC framework for the Sub-Saharan African countries. Using a two-step system GMM estimator, we found that the share of industry in GDP has a significant positive impact on CO2 emissions, while renewable electricity output reduces CO2 emissions. If causal, a one percentage point increase in renewable electricity output reduces carbon emissions by 0.22%. Moreover, the renewable energy sector then mediates the positive effect of industry value added on CO2 emissions. We also find evidence for the statistical significance of the inverted U-shaped relationship between GDP per capita and CO2 emissions.