Energy Consumption, Institutions and Environmental Quality in Sub-Saharan Africa

Abstract

Efficient use of renewable energy is critical for ensuring high economic growth and competition. However, the adoption and use of renewable energy alone may not be a sufficient means of ensuring environmental sustainability. By utilising the system Generalised Method of Moments technique on a balanced panel dataset of 26 sub-Saharan African countries from 2002 to 2016, the study investigated the effect of disaggregated energy consumption and institutional quality on environmental quality. The results of this study indicate that while non-renewable energy consumption degrades the environment, renewable energy consumption enhances the quality of the environment. The study also discovers that a lower tax burden and improvement in government integrity lead to higher environmental quality given the consumption of renewable energy. From the moderating effect of energy consumption and institutional quality, more secured property rights and improvement in government integrity significantly moderate the effect of non-renewable energy consumption on environmental quality while a lower tax burden moderates the effect of renewable energy consumption on environmental quality. The study recommends that to reduce carbon-induced emissions, governments and policymakers need to commit to renewable energy development while implementing a flexible tax system, securing property rights, and maintaining strong state integrity.