Transition to energy‐efficient and clean transportation system in Nigeria: Evidence from transportation fuels demand analysis

Abstract

AbstractThis paper examines the prospects and challenges of transition from the current inefficient and highly polluting road transportation system in Nigeria to a highly efficient and environmentally friendly road transportation system. The study used time‐series data from 1981 to 2019 within the framework of demand for gasoline and diesel in the structural time‐series estimation model, where the concept of the asymmetric price increase and underlying energy demand trends were incorporated into the models. The findings of the study show that both gasoline and diesel are highly price inelastic, and the UEDT is generally stochastic but exhibits a positive trend in a large part of the estimation period. The conclusion and policy implication of the result suggests that governments should combine incentives and public enlightenment on the importance of energy efficiency as well as transport infrastructure improvements with gradual adjustments of domestic prices in the short run. However, in the long run, policy should be extended towards massive investments in the transformation and modernization of the whole transportation sector in line with sustainability, efficiency and environmentally friendly goals in the transportation system of the country.