Environmental perspectives on the impacts of trade and natural resources on renewable energy utilization in Sub-Sahara Africa: Accounting for FDI, income, and urbanization trends

Abstract

Trade has remained a pivotal ingredient to the economic prosperity of many resources rich Sub-Sahara African (SSA) states over the years. However, an examination of the environmental aspects of trading activities amidst vast natural resources is critical to positioning Sub-Sahara African states on environmental sustainability path in their quest for economic prosperity. Unlike most extant studies that only focused on fossil energy facets of energy consumption, this study provides a synthesis of the impacts of trade and natural resources on renewable energy consumption in a bid to address environmental sustainability challenges in the SSA region. The empirical dissection hinges on the ARDL approach for available renewable energy consumption data while incorporating other relevant factors like the SSA's income level, FDI, and urbanization trends among the countries. From the results, the duo of openness to trade and urbanization posits significant detrimental impacts on the level of renewable energy consumption in the SSA region, while the impacts created by resources rent on renewable energy consumption level were insignificant. Conversely, a rise in income level alongside higher FDI was observed to be leading to a significant positive effect on renewable energy utilization with estimated long-run elasticity of -0.126 and -0.105 respectively. This implies that poverty reduction and foreign capital inflow can significantly boost the adoption and use of renewables in the SSA. As such, policy frameworks to harness essential FDI inflow for environmental benefits in view of clean energy consumption amidst vast resources were highlighted for the SSA authorities, while also emphasizing the need to guide against potential regional pollution haven tendencies.