Environmental degradation, renewable and non-renewable electricity consumption, and economic growth: Assessing the evidence from Algeria

Abstract

The imperative to reduce CO2 emissions is stronger than ever and investment in renewable energy is one of the most viable options to reduce the carbon footprint. This article explores the dynamic causal relationship between CO2 emissions, renewable electricity consumption, non-renewable electricity consumption and economic growth in Algeria by using Autoregressive Distributed Lag Cointegration approach over the period 1980–2012. The empirical results confirm the existence of cointegration long-run relationship among the variables. We find that, in the long-run, economic growth and non-renewable electricity consumption have a detrimental effect on the environment quality, whereas renewable energy use has a beneficial environmental effect. Furthermore, in the short-run, results reveal unidirectional causality relationship running from GDP to NREC, supporting the conservation hypothesis, i.e. electricity consumption is dictated by economic growth. The results suggest broadly that renewable electricity consumption can help to enhance environmental quality in Algeria. But so far, renewable electricity generation has not reached a level that allows a significant contribution to energy-based carbon dioxide emissions reduction target.