Renewable energy consumption in Africa: the role of economic well-being and economic freedom
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(2020) 10:32
Energy, Sustainability and Society
ORIGINAL ARTICLE
Open Access
Renewable energy consumption in Africa: the role of economic well-being and economic freedom Anthony Amoah* , Edmund Kwablah, Kofi Korle and Daniel Offei
Abstract This study investigates the role of economic well-being and economic freedom as drivers of renewable energy consumption using the share of renewables in total energy consumption in Africa. To achieve this, the study employs a panel data of 32 African countries over the period 1996-2017. To deal with identification challenges associated with panel time-series data, we use the Dynamic Ordinary Least Squares econometric technique. As part of our findings, first, we have evidence that increasing economic well-being in Africa increases the share of renewables in total energy consumption to a point after which it turns negative (inverted U shape). Second, the disaggregated measures of economic freedom show that both property rights and tax burden decrease the share of renewables in total energy consumption. On the contrary, an increase in trade freedom and business freedom measures increases the share of renewables in total energy consumption. Toward the goal of promoting access to affordable, reliable, sustainable, and modern energy for all by 2030, governments in Africa should actively encourage trade freedom and business freedom to enhance the share of renewable energy consumption. Similarly, reducing the tax burden will promote the share of renewable energy consumption. Likewise, we call for further investigation into our evidence of a negative relationship between property rights and the share of renewables in total energy consumption. Keywords: Renewable energy consumption, Economic freedom, HDI, DOLS, FMOLS, OLS, Africa
Background The traditional energy supply challenges in the 70s and 80s, and climate change concerns, have ignited interest in renewable energy sources. In September 2015, the United Nations set a new target (Sustainable Development Goal {SDG} 7) to promote access to affordable, reliable, sustainable, and modern energy for all by 2030. This concerted global effort shows a revived interest in the investment, production, and consumption of cheaper and environmentally friendly sources of energy. Globally, the average consumption of renewable energy has been rising as a result of these efforts. The International Energy Agency (IEA) report [1] predicts that the share of renewables in * Correspondence: [email protected] Department of Economics, Central University, Accra, Ghana
meeting rising global energy demand will grow by onefifth to reach 12.4% by 2023. According to Demirbas [2], the contribution of renewable energy sources to the global energy supply will reach 34.7% and 47.7% by 2030 and 2040, respectively. That is, by the end of 2030, approximately 35% of the global energy supply will come from renewable sources. This evidence is perhaps a big sigh of relief to proponents of renewable energy use and critics of non-renewable energy use because of climat
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