Testing the Effect of Oil Prices, Ecological Footprint, Banking Sector Development and Economic Growth on Energy Consumptions: Evidence from Bootstrap ARDL Approach

Abstract

Energy generation from carbon fuels produces a major portion of the greenhouse gases that envelop the planet and trap the sun’s heat. Fossil fuels, including coal, oil, and gas, account for approximately 75% of global greenhouse gas emissions and almost 90% of carbon dioxide emissions. Therefore, there is an urgent need to finance cleaner, efficient, low-cost, sustainable, and energy-reliable alternative fuels. Therefore, we investigated the effect of oil prices, ecological footprint, banking sector development, and economic growth on energy consumption in South Africa. We employed the newly developed bootstrap autoregressive distributed lag (ARDL) model to the link between explanatory antecedents and explained facets in the short and long term. The outcome of our study witnessed the positive and significant effect of economic growth and ecological footprint on energy consumption in the short and long run, in the case of South Africa. This suggests that a drastic boost in South African economic growth and environmental quality results in the increased use of energy. However, ARDL outcomes affirm that industrial structure has effects positively and significantly in the short run only. Moreover, oil price shocks have a negative and significant link with energy use in the short and long run, suggesting that in the case of South Africa, increased oil prices reduce the use of energy. Based on the evidence obtained from the results of our study, we proposed several policy suggestions and recommendations to the government authorities, policymakers, environmentalists, and other stakeholders in order to develop an energy strategy in line with sustainable economic growth and the environment.