Energy Security, Trade and Transition to Green Economy in Africa

Abstract

Environmental challenges have enhanced renewed focus on the need to drive the economy in an economically, socially and environmentally sustainable manner; therefore resulting to the emergence of the concept of green economy. In driving the economy towards a green growth path, the pattern of trade and security of energy will play a vital role. Energy (renewable) has been identified as one of the 6 sectors that would provide trade opportunities for export markets in the transition towards a green economy, particularly for developing economies, Africa inclusive. This paper assesses how the interaction of trade and green economy strategies could promote energy security in Africa for the period 1995 to 2014. The study examines this relationship in forty-two African economies and addresses energy security based on the IEA definition which captured energy security using the indicator of affordability (access) and sustainability (environmentally friendliness). The study situates its theoretical root in the EKC hypothesis and the energy ladder hypothesis and the estimation procedures were based on the dynamic panel approach using the System-GMM with collapsed instrument option. The study found that the indicators of green growth and trade were important determinant of energy security in Africa. This suggests that drive for greener growth agenda enhances provision of clean energy. Also, the present export structure and trade openness of African economies contributes inversely to energy access and environmental sustainability respectively.