Determinants of Renewable Energy Consumption in Africa: Evidence from System GMM

Abstract

The adoption of renewable energy remains Sub-Saharan Africa’s best option to achieve sustainable growth and mitigate climate change. The essence of this study is to examine the factors that determine the adoption of renewable energy adoption in Africa by employing the System Generalized Methods-Of-Moment (GMM) to analyze data sourced from 1990 to 2019 on some selected African economies. The study examined the tripartite role of the economic, environmental, and socio-political factors on renewable energy adoption in Africa and noted that a positive relationship exists between economic and renewable energy adoption, supporting the validity of the feedback hypothesis. Hence, a policy that supports simultaneous growth of the economy and renewable energy could be adopted. The results further show that environmental factors such as carbon emission and ecological footprint negatively impact renewable energy (RE) adoption in Sub-Saharan African economies. The impact of socio-political factors is, at best mixed; for instance, the result of urbanization is positive and significant, suggesting that urbanization helps in the quick adoption of renewable energy in the studied economies, while the results of corruption show otherwise. To account for single-country dynamics, the study employed the full PMG and noted that the pollution haven hypothesis holds for a number of African economies. The results offer some policy implications.