The carbon dioxide emissions effect of income growth, electricity consumption and electricity power crisis

Abstract

PurposeAttaining higher economic growth and development is among the topmost agenda for many countries. However, the process to attain such growth and development involves higher level of energy consumption and that may not spare the quality of the environment. A similar concern has been raised for Ghana as it aims to attain an upper middle-income status in the near future. The country's energy sector has however not been robust in meeting the electricity demand, leading to a recurrent power crisis. The study seeks to analyze the effect of income growth, electricity consumption and power crisis on Ghana's carbon dioxide (CO2) emissions.Design/methodology/approachThe paper relies on annual time series data from the World Bank (2020) and employs the autoregressive distributed lag (ARDL) and fully modified ordinary least square (FMOLS) estimation techniques for regression analysis.FindingsThe results showed that the environmental Kuznets curve (EKC) hypothesis is valid for Ghana in the case of carbon emissions. Also, while electricity consumption has an insignificant effect on carbon emissions, electricity power crisis exerts a positive effect on emission of CO2. It was also noted that industrialization and financial development increase CO2 emissions.Research limitations/implicationsPolicy implications from the study include the EKC hypothesis can be a sound basis for environmental policy in Ghana. Other recommendations and areas for future research have been provided.Originality/valueThe study empirically estimates the effect of electricity crisis on CO2 emissions.