Heterogeneous effects of renewable energy and structural change on environmental pollution in Africa: Do natural resources and environmental technologies reduce pressure on the environment?

Abstract

The global economy today faces the most devastating effects of global warming than what is evident in the pre-industrial age. Consequently, governments across the globe are making diligent efforts towards halting this undesirable menace through many avenues in which structural change stands out. Hence, this study examines the impacts of structural change, natural resource dependence, environmental technology, and renewable energy in selected five top carbon-emitting African countries, Algeria, Egypt, Morocco, Nigeria, and South Africa, from 1990 to 2019. The study employs second-generation estimators comprising cross-sectional auto regressive distributive lag (CS-ARDL), common correlated effects mean group (CCEMG), augmented mean group (AMG), and quantile regression (QR). The choice of the second-generation estimators was motivated by the presence of cross-sectional dependence and slope heterogeneity in the model leading to the adoption of the Westerlund cointegration test for the long-run evaluation. The empirical results based on CS-ARDL are presented thus. The indicators of structural change significantly reduce carbon emissions. Similarly, environmental technology and renewable energy mitigate the surge in carbon emissions. In contrast, natural resource dependence induces a substantial increase in carbon emissions. Besides, the findings are robust based on the outcomes reported from common correlated mean group (CCEMG), augmented mean group (AMG), and QR tests. Moreover, the causality from the Dumitrescu Hurlin test provides empirically backed the nexus based on unidirectional and bidirectional causalities. Promoting service-led structural change, environmental technology practices, and investment in renewable energy are among the prominent policy insights.