Abstract
Reducing energy intensity is an important element for Ethiopia to achieve its ambitious climate-resilient growth goals. Understanding the factors that determine energy intensity plays a crucial role for academics and policymakers to formulate sound energy conservation and energy efficiency policies. This article investigates drivers of energy intensity in Ethiopia over the period of 1974–2014. The ARDL bounds test approach to cointegration and FMOLS-based Hansen parameter instability test methods were applied to examine the long-run relationship among the variables. The result reveals that there is an inverted U-shape or Environmental Kuznets curve-type relationship between economic growth and energy intensity, implying that economic growth at early (industrialization) stage of development spurs energy intensity while delinking occurs at the later stages of development. Urbanization increases energy intensity, while impact of import is negative. The Toda–Yamamoto Granger causality test result shows a bidirectional causal relationship between import and energy intensity. Moreover, energy intensity Granger causes aid and industrialization.
Highlights
Energy plays critical role in bringing the sustainable development
Challenges like climate change and energy security that world economy is facing the in the twenty first century is mainly due to energy consumption
To our knowledge, there is no research conducted on testing the existence of energy-Environmental Kuznets Curve (EKC) hypothesis in Ethiopia so far. It is against this backdrop that this study examines the impact of economic growth on energy intensity in Ethiopia in the context of energy-EKC hypothesis for the first time, to the level of our knowledge
Summary
When not used efficiently, its negative consequences on any economy is enormous. This could be related to threatening the sustainable development of the economy, energy security and worsening the environmental conditions (Adom and Kwakwa 2014). Challenges like climate change and energy security that world economy is facing the in the twenty first century is mainly due to energy consumption. Since anthropogenic emissions of carbon dioxide (CO2) result predominantly from the combustion of fossil fuels, energy consumption is at the focus of the climate change debate. According to U.S Energy Information and Administration (EIA) (2016), world energy-related CO2 emissions increase from 32.3 billion metric tons in 2012 to 35.6 billion metric tons in 2020 and to 43.2 billion metric tons in 2040
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