Combining the role of urbanization and renewable energy in sustainable development: testing the EKC hypothesis for Africa.

Abstract

The pressing necessity to curb greenhouse gas emissions due to climate change has sparked significant scientific interest in comprehending the factors behind CO2 emissions, particularly concerning environmental sustainability challenges. Nonetheless, there exists a notable gap in our understanding of how the process of urbanization interacts with the utilization of renewable energy to impact CO2 emissions. This research endeavor seeks to evaluate the complex interplay among urbanization, renewable energy, and CO2 emissions across 46 African nations spanning from 1990 to 2019. To accomplish this objective, a variety of econometric methodologies are employed, including Driscoll-Kraay standard errors, IV-GMM, and method of moments quantile regression (MMQR) panel estimations to address issues like cross-sectional dependencies, endogeneity, heterogeneity, and panel Granger causality examination. The empirical results suggest that urbanization leads to an increase in CO2 emissions, whereas the consumption of renewable energy plays a role in enhancing environmental quality by reducing CO2 emissions. A significant outcome of the study is the revelation that a combination of urbanization and renewable energy leads to a decrease in carbon emissions. Moreover, the Environmental Kuznets Curve (EKC) hypothesis is validated. Lastly, through the Dumitrescu-Hurlin panel causality test, it is uncovered that urbanization and renewable energy consumption exhibit a bidirectional relationship with CO2 emissions. To reduce dependence on fossil fuels and curb CO2 emissions, policymakers should promote renewable energy usage in urban areas.