Do traditional energy dependence, income, and education matter in the dynamic linkage between clean energy transition and economic growth in sub-Saharan Africa?

Abstract

This study provides some empirical evidence on the dynamic linkage between modern renewable (clean) energy consumption (SDG-7.2) and economic growth using the Dynamic Common-Correlated Effects (DCCE) estimation Approach in 20 Sub-Saharan African (SSA) countries for the period from 2000 to 2017. The study also aims to examine the role of traditional energy dependence, income, and education in the linkage using the dynamic panel data threshold effects model with endogenous regressors estimations. The findings indicate that an increase in modern renewable energy in the total final energy mix is not conducive to economic growth (induces a certain economic cost) in the SSA region. This could be explained by the fact that modern renewables are not being utilized efficiently and fully in the region. However, the modern renewables-growth linkage depends on traditional energy dependence, the level of income, and education. Specifically, the negative effect of modern renewables tends to weaken in the regimes with lower traditional energy intensity, higher levels of income and education. Our main conclusion remains robust to additional control variables considered in the analysis. Hence, while expanding the use of clean energy technologies, basic enabling environments need to be created to make a smooth clean energy transition and reduce its economic costs.