African Continental Free Trade Area treaty and CO2: A volatility-driven CO2 mitigation pathways model for ratified countries

Abstract

The African Continental Free Trade Area (AfCFTA) agreement is expected to boost continental trade volume, but the effects of the expected increase in trade volumes on carbon dioxide(CO2) emissions has not been explored. In addition, although attempts are being made towards providing a reliable CO2 forecasting and mitigation values, existing mitigation pathways have been found to be illusory, misleading, and largely irrelevant due to their inability to inculcate observed volatilities in the core modeling. This study considers 25 countries that have ratified the AfCFTA agreement investigates their CO2 determinants, and proposes relevant and representative mitigation roadmaps for each country. A novel model that considers growth, maximum and minimum volatilities for all the variables is constructed to propose these roadmaps. The empirical results on causal relationships find that whiles trade openness, urbanization, and economic activities are positive determinants of CO2, renewable energy, human capital, and financial development are negative drivers. Among the factors examined, trade openness has been identified as the most significant long-term driver of CO2 within AfCFTA countries. The results from our prediction model show that the 25 ratified countries will collectively increase their emissions by 17% relative to their 2015 emissions level if no measures are taken. However, if these countries follow our proposed radical roadmaps, they will collectively emit zero carbon emissions by 2028. In order to achieve a massive reduction in CO2 emissions, policymakers within the AfCFTA should adopt radical mitigation roadmaps as proposed. Future studies should focus on developing models to identify the cost and highlight the feasibility of our strategy.