The role of non-renewable energy consumption in economic growth and carbon emission: Evidence from oil producing economies in Africa

Abstract

Non-renewable energy consumption facilitates the production of output but it is also a major source of carbon emission, leading to a dilemma in policy priority between economic growth and pollution reduction. The study therefore investigates the role of non-renewable energy in economic growth and carbon emissions among the top oil producing economies in Africa during 1980–2015. After accounting for nonlinearity and structural break in unit root and cointegration analysis, the paper adopted non-linear autoregressive distributed lag (NARDL) technique. The study reveals evidence of asymmetric effect of per capita consumption of both petroleum and natural gas consumption on economic growth and carbon emission per capita in all the selected countries except Algeria. In Nigeria, although positive change in the non-renewable energy consumption retards growth, it reduces emission. In the case of Gabon, increase in the consumption of these energy products promotes growth and enhances environmental quality. Consumption of these energy types has negligible impact on environmental pollution in Egypt as it enhances economic growth. While positive change in the non-renewable energy consumption contributes to economic growth in Angola, the effect on carbon emission is mixed across time and energy type. In addition, the influence of negative change in petroleum and natural gas consumption is similar to those observed for positive change in Egypt and Nigeria. It is therefore imperative for policymakers in oil producing economies (in Africa) to explore avenues to invest in, and promote, carbon-reducing technology in production processes in their quest for economic growth if they must continue to increase the consumption of their abundant resources-petroleum and natural gas.