Renewable and Sustainable Energy Reviews 72 (2017) 1067–1075

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Renewable and Sustainable Energy Reviews

journal homepage: www.elsevier.com/locate/rser

CO2 emissions, renewable energy and the Environmental Kuznets Curve, a MARK
panel cointegration approach
Zakaria Zoundi
Department of International Development Policies, Graduate School of International Cooperation Studies, Kobe University, 6578501 Kobe, Japan

A R T I C L E I N F O A BS T RAC T

Keywords: This study combines a panel cointegration analysis with a set of robustness tests to assess the short and long-
CO2 emissions run impacts of renewable energy on CO2 emissions, as well as the Kuznets Environmental Curve hypothesis for
Renewable Energy 25 selected african countries, over the period 1980-2012. The results provide no evidence of a total validation of
Panel cointegration EKC predictions. However, CO2 emissions are found to increase with income per capita. The overall estimations
strongly reveal that renewable energy, with a negative effect on CO2 emissions, coupled with an increasing long-
run effect, remains an efficient substitute for the conventional fossil-fuelled energy. Nonetheless, the impact of
renewable energy is outweighed by primary energy consumption in both the short and long run, entailing more
global synergy for outpacing the environmental challenges.

1. Introduction population accessing electricity, the increase in urbanization, combined

with the reduction in crop yields due to climate change, and the high
The 2015 Paris conference on climate change appears as a migration from rural to urban areas would constitute one the most
watershed mark in the efforts of the international community to challenging issues for sub-Saharan Africa in the energy sector. This
grapple with global warming through reducing greenhouse gases paper investigates the role of Africa in global warming by analyzing the
emissions. In spite of the mobilization and determination showed by efficiency of an environmental policy suitable for developing countries,
governments over decades, at the actual rate of CO2 emissions, the which is spreading across Africa and perceived as the path to sustain-
temperature of the planet will still remain above the threshold of 2 °C able growth in Africa [24], namely renewable energy. According to the
set by scientists [47]. The alarming fact is that the temperature is International Renewable Energy Agency [23], energies generated from
projected to reach 30C by 2050 [47], increasing the risk of natural sources such as wind, solar, and hydro can help boost friendly
disasters, and creating more pressure on resources [24]. According to environmental development in Africa in the sense that they are
the IPCC [24], if no sustainable adaptation policy is implemented, the inexhaustible and free. Their deployments can create jobs, contribute
impact of climate change would reduce the annual GDP growth in to the improvement of local skills, and they are good pathways for
developing countries as much as 2–4% by 2040, and 10% by 2100. The income generating activities [23].
common global agenda putative by nations is to compel developed Two main features distinguish this paper from previous research on
countries to implement more environmental friendly energy policies the topic, and contribute to filling the gap in the literature. First, the
(through standard settings, nuclear energy, etc.), and help developing topic is focused solely on Africa. The majority of papers on CO2
countries to reduce their CO2 emissions, without jeopardizing their emissions concentrate either on developed countries or on both
economic progress. Among these energy policies, actions such as developed and developing countries. For example, Baek and Kim [6],
environmental fund transfers to developing countries, renewable Apergis and Payne [2], and Ibrahim and Law [20] have analyzed,
energy, and technology transfer can help developing countries to take respectively, G-20 countries, 6 Central American countries and 69
part in the world's environmental challenge [22,48]. countries (including developed and developing countries). In their
Although Africa pollutes less than other continents, it is the most research, they have found that energy consumption increases CO2
severely affected by global warming. According to the IPCC [24], with emissions. Apergis et al. [3] have analyzed 19 developed and develop-
around 50% of the urban population and nearly 10% of the rural ing economies, and have found that nuclear energy has a negative effect

Abbreviations: ASEAN, Association of Southeast Asian Nations; CCEEM, Common Correlated Effects Estimator; EKC, Environmental Kuznets Curve; EIA, Energy Information
Administration; IPA, International Energy Agency; IPCC, Intergovernmental Panel on Climate Change; IRENA, International Renewable Energy Agency; MRIO, Multi-Regional Input–
Output; OECD, Organization for Economic Cooperation and Development; PSTR, Panel Smooth Transition Regression; STIRPAT, Stochastic Impacts by Regression on Population,
Affluence and Technology

http://dx.doi.org/10.1016/j.rser.2016.10.018
Received 4 February 2016; Received in revised form 23 July 2016; Accepted 14 October 2016
Available online 03 November 2016
1364-0321/ © 2016 Elsevier Ltd. All rights reserved.
Z. Zoundi Renewable and Sustainable Energy Reviews 72 (2017) 1067–1075

Fig. 1. Development process and pollution: The Environmental Kuznets Curve.

on CO2 emissions while energy consumption has a positive impact. 1.1. Environmental Kuznets Curve
Although Africa has comparatively less CO2 emissions (which could be
the reason why the majority of the studies have omitted the continent), Tremendous efforts have been made by researchers to analyze and
it is important to measure, on one hand, the continent's contribution to understand the potential factors that can explain the CO2 footprint and
global warming; and, on the other hand, the effectiveness of policies its mitigation (with no harm on development). Although the recent
such as renewable energies. Second, the paper analyzes the long-term literature tends to move towards the importance of nuclear energy in
effectiveness of renewable energy and its cointegration with population mitigating greenhouse gas emissions (such as Baek and Pride [7];
growth, energy consumption and income per capita, using a panel Apergis, et al. [3]; Menyah and Wolde-Rufael [33], to name just a few),
cointegration approach. Although research on the mitigation of global many studies have paid attention to the potential impact of renewable
warming has been driven toward nuclear energy as a potential strategy energy in greenhouse gas emissions as well as other relevant sources of
for reducing the carbon footprint, in Africa, nuclear energy is in not an pollution such as energy consumption, and population growth. Table 1
ideal option due to the long lead times, governments disapproval and summarizes some of the most cited studies.
the high capital cost, as pointed out by Apergis et al. [3]. Furthermore,
the panel cointegration analysis used in this paper appears more 2. Data and methodology
appropriate than the methods commonly used in the literature, such
as VAR, VEC, panel random and fixed effect or Autoregressive The study covers 33 years (1980–2012) and 25 countries for a total
Distributed Lag (ARDL) (Fig. 1). of 825 observations. The selection of countries is mainly based on the
Unlike traditional time series or panel data analyses, panel coin- availability of data, and the existence of significant renewable energy
tegration has an advantage of pooling the long run information initiative (reflected in the data) such as wind, solar, hydropower,
included in the panel, by allowing the short run dynamics and fixed geothermal, and heat pumps. The list of variables includes CO2
effect to be heterogeneous across the panels [39]. In addition, the t- emissions in metric ton per inhabitant, as a proxy for air quality; real
statistic allows for a more flexible alternative hypothesis [37]. GDP per capita in USD (constant 2005); per capita primary energy
Additionally, the paper assesses the hypothesis that pollution consumption (converted into kg of oil equivalent); total renewable
increases as income rises up to a threshold point, then starts decreas- electricity net consumption per capita (in kilowatt-hour) as a proxy for
ing. The inverted U-shape of the relationship income-pollution refers to renewable energy. Renewable electricity comes from 5 main sources:
the EKC, initiated by Kuznets [29] to explain the relationship growth- hydro-electric power, geothermal, solar, wind and biomass such as
income inequality, and adapted by economists since 1991 in the wood, wastes and biofuels [16]. To test the effect of demography on
context of environmental degradation. CO2 emissions, the variable population growth is added. While the
According to the EKC, there are three stages in the intensity of variables CO2 emissions, renewable energy and energy consumption
pollution. Each stage corresponds to a step in the growth process. At are collected from EIA. The African Development Indicators database
the pre-industrial stage where income per capita is low, environment (available in the World Bank databank) provides data on population
pollution increases. This increase in pollution is explained by factors and real GDP per capita. Table 2 presents a summary statistics of the
such as unclean technology used in economic activities, lack of variables.
awareness, prioritization of income growth and profits at the early
stage of growth [51]. However, with the increment in income per capita
3. Methodology
and economic growth, followed by improved social indicators, more
investments are made for safer technologies, households become more
3.1. Equation specification
willing to target their expenditures towards cleaner goods and assets
(water, houses, cars, etc.). This stage marks the turning point to lower
The baseline equation for this study is the equation specified by
environment pollution. As the economy crosses the pre-industrializa-
previous studies such as Iwata, et al. [25]. In their study, the authors
tion stage and moves to the post-industrialization phase, environmen-
have used an ARDL approach to assess the EKC hypothesis and the role
tal depletion reduces [35]. The folowing graph summarizes the EKC
of nuclear energy in mitigating CO2 emissions in France. The log-linear
insight.
equation specified is as follows:
ln (CO2 )t = α0 + α1 ln yt + α2 (ln yt )2 + α3 ln nuct + εt (1)

where CO2 represents CO2 emissions per capita; y real GDP per capita;

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Table 1
Selected literature on CO2 emissions.

Authors Regions Period Methodology Results (impact on CO2 emissions)

Environmental Renewable Energy Population growth

KuznetsCurve energy consumption

Apergis and Central America (6 1971–2004 Panel VEC Holds – Positive impact –
Payne [2] countries)
Alam et al. [1] India, Indonesia, 1970–2012 ARDL bounds test Holds for Brazil, China – Positive impact Positive and significant
China, and Brazil and Indonesia impact for India and Brazil
Apergis et al. 19 countries 1984–2007 Panel VEC Does not hold – Positive impact –
[3] (developed and non-
developed)
Baek and Kim G-20 members 1960–2006 VAR (cointegration) Holds for developed – Positive impact –
[6] countries
Bilgili et al. [10] 17 OECD countries 1977–2010 Panel FMOLS and Holds Negative impact – –
DOLS
Baek and Pride 10 countries 1965–2007 VAR (cointegration) Does not hold – Positive impact –
[7]
Begum et al. [9] Malaysia 1970–2009 ARDL Does not hold – Positive impact No impact
David et al. [14] Worldwide 1977–1990 Panel fixed effect Holds for some – – –
pollutants
Dong et al. [15] Worldwide 1995–2011 MRIO model Mixed – – –
Ibrahim et al. 69 countries 2000–2008 Difference and system Holds Positive impact –
[20] (developed and non- GMM
developed)
Iwata et al. [25] France 1960–2003 ARDL Holds – Positive impact –
Menz and 26 OECD countries 1960–2005 Panel regression – – – Positive impact
Welsch [34]
Lantz and Feng Canada (5 regions) 1970–2000 GLS Does not hold Positive impact – Inverted U-shaped
[30]
Liu et al. [32] China 1990–2012 STIRPAT model Does not hold for Positive impact The impact is function of
industrial waste the regions development
level
Robalino-López Venezuela 1980–2025 Panel cointegration Holds Negative imoact
al. [41]
Nasir and Pakistan 1972–2008 Johansen Holds Positive impact –
Rehman cointegration
[36]
Cemil et al. [12] 36 countries 1971–2009 CCEEM method – Negative impact – –
(developed and non-
developed)
Shi [44] 93 countries 1975–1996 GLS – – – Positive impact
Soytas and Sari Turkey 1960–2000 VAR, Granger Does not hold – No impact –
[45] Causality
Soytas et al. U.S 1960–2004 VAR, Granger Does not hold – Positive impact –
[46] Causality
Wesseh and Lin 34 African countries 1980–2011 Translog production – Negative impact – Inverted U-shaped
[49] function
Heidari et al. ASEAN countries 1980–2008 PSTR model Holds – Positive impact –
[19]
Gene and Alan Worldwide 1977–1990 Panel Random effect Holds – – –
[17]
Jebil et al. [26] 24 sub-Saharan Africa 1980–2010 Panel cointegration Does not hold Mixed –
countries
Shafiei and OECD countries 1980–2011 STIRPAT model Holds in Urban Negative impact Positive impact –
Salim [43]
Atici [5] Bulgaria, Hungary, 1980–2002 Panel regression Holds – Positive impact –
Romania and Turkey
Apergis and 14 Asian countries 1990–2011 GMM Holds – – U-shaped
Ozturk [4]

and nuc electricity production from nuclear source (as percentage % of included to test the possible impact of demography in CO2 emissions.
total electricity production) and ε the error term. In the equation, lnyt The final equation specification for this study takes the form of:
and (lnyt)2 refer to the EKC hypothesis that there is a nonlinear
quadratic relationship between income and environment pollutants ln (COE )it = ψ0 + ψ1 ln INCit + ψ2 (ln INCit )2 + ψ3 ln RECit + ψ4 ln PECit
(such as carbon dioxide (CO2), nitrous oxide (N2O), methane (CH4) + ψ5 POPit + γit (2)
etc.). As this study focuses on renewable energy as a substitute for
where COE represents CO2 emissions per capita; INC, real GDP per
greenhouse gases, and due to the inexistence of nuclear power plants in
capita; REC, renewable energy consumption per capita; PEC, primary
the majority of African countries (only South Africa has the most active
energy consumption per capita; POP, population growth;ψ0 and γit are
and significant nuclear plant), the variable lnnct is dropped and
the intercept and the error term, respectively. The slope parameters are
replaced by a proxy for renewable energy. To avoid the bias generated
captured by ψi (i=1,4 ). Following EKC insight (pollution increases with
by the omission of relevant variables, the primary energy consumption
income, up to a threshold point, then starts decreasing), ψ1 and ψ2 are
is added to the equation. In addition, the variable population growth is
expected to be positive and negative, respectively. Renewable energy

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Table 2
Summary statistics.

Country Statistics CO2 per capita Income per capita Renewable energy consumption Primary energy consumption Population growth

Algeria Mean 3.01 2702.46 10.20 1148.52 0.02

Std. Dev. 0.30 286.08 6.66 140.07 0.01
Min 2.45 2271.44 1.70 859.28 0.01
Max 3.58 3227.80 28.32 1504.07 0.03

Angola Mean 0.82 1845.40 88.13 203.92 0.03

Std. Dev. 0.34 567.46 39.39 54.88 0.00
Min 0.36 1103.61 59.97 150.83 0.02
Max 1.40 3033.13 180.79 341.46 0.04

Cameroon Mean 0.44 983.04 207.28 140.29 0.03

Std. Dev. 0.15 170.62 14.24 14.72 0.00
Min 0.25 779.83 151.14 114.41 0.03
Max 0.88 1370.70 241.76 166.12 0.03

Cote d′Ivoire Mean 0.38 1078.00 107.63 170.29 0.03

Std. Dev. 0.07 114.81 30.55 28.63 0.01
Min 0.30 934.31 37.77 117.85 0.02
Max 0.50 1392.03 200.02 237.57 0.04

Dem. Rep. of the Congo Mean 0.08 369.37 137.03 61.73 0.03
Std. Dev. 0.04 164.13 20.31 18.44 0.00
Min 0.03 201.73 102.13 37.73 0.02
Max 0.13 613.64 172.85 86.74 0.04

Egypt Mean 1.75 1068.69 183.21 728.15 0.02

Std. Dev. 0.36 331.72 24.79 170.27 0.00
Min 0.94 537.81 143.50 410.45 0.02
Max 2.41 1642.35 227.34 1041.53 0.03

Ethiopia Mean 0.06 158.60 28.67 27.38 0.03

Std. Dev. 0.01 37.62 14.49 7.47 0.01
Min 0.03 110.68 12.57 16.62 −0.03
Max 0.09 268.41 71.53 47.10 0.04

Gabon Mean 4.74 7856.67 666.40 934.76 0.02

Std. Dev. 1.25 954.92 89.22 160.59 0.00
Min 2.83 6222.40 352.46 700.34 0.02
Max 6.67 9455.52 795.09 1327.53 0.03

Ghana Mean 0.25 705.83 317.67 169.84 0.03

Std. Dev. 0.06 157.12 86.01 24.30 0.00
Min 0.15 507.65 146.13 105.29 0.02
Max 0.37 1149.89 488.43 206.13 0.03

Guinea Mean 0.16 282.97 38.37 65.22 0.03

Std. Dev. 0.03 15.86 11.44 8.97 0.01
Min 0.12 257.87 24.00 50.10 0.02
Max 0.25 306.47 64.62 91.29 0.06

Kenya Mean 0.28 604.64 116.30 130.08 0.03

Std. Dev. 0.03 29.82 18.81 10.09 0.00
Min 0.24 568.57 66.21 114.82 0.02
Max 0.35 686.62 145.43 153.51 0.04

Madagascar Mean 0.11 300.68 30.61 46.25 0.03

Std. Dev. 0.02 33.83 7.19 7.96 0.00
Min 0.08 249.06 16.69 35.58 0.03
Max 0.15 407.06 59.88 60.69 0.03

Malawi Mean 0.07 295.64 85.59 47.98 0.03

Std. Dev. 0.01 26.65 17.94 7.60 0.01
Min 0.05 252.58 59.90 34.03 0.00
Max 0.12 351.62 121.02 72.13 0.06

Mali Mean 0.05 385.60 21.16 24.07 0.03

Std. Dev. 0.01 73.17 6.77 2.68 0.01
Min 0.03 273.13 11.34 14.83 0.01
Max 0.08 499.69 44.93 31.60 0.03

Mauritius Mean 2.34 4089.63 236.79 858.04 0.01

Std. Dev. 1.13 1569.02 177.67 397.65 0.00
Min 0.75 1890.59 35.05 305.80 0.00
Max 4.23 7064.52 498.42 1476.95 0.01
(continued on next page)

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Table 2 (continued)

Country Statistics CO2 per capita Income per capita Renewable energy consumption Primary energy consumption Population growth

Morocco Mean 1.03 1692.72 46.72 375.15 0.02

Std. Dev. 0.18 380.58 24.81 83.03 0.01
Min 0.75 1214.57 16.38 261.80 0.01
Max 1.48 2503.15 127.45 573.72 0.02

Mozambique Mean 0.11 267.37 333.70 114.16 0.02

Std. Dev. 0.04 106.62 319.74 80.24 0.01
Min 0.07 153.55 1.83 33.15 0.00
Max 0.22 493.56 1123.37 370.43 0.04

Nigeria Mean 0.74 1032.47 44.18 173.52 0.03

Std. Dev. 0.13 272.72 10.12 19.05 0.00
Min 0.50 742.49 23.28 127.23 0.02
Max 0.94 1617.45 63.07 197.67 0.03

South Africa Mean 8.76 5074.58 37.88 2605.09 0.02

Std. Dev. 0.44 477.59 18.69 137.96 0.01
Min 8.05 4413.38 3.69 2337.24 0.01
Max 9.73 6047.27 89.84 2938.28 0.03

Sudan Mean 0.21 686.42 52.40 87.55 0.03

Std. Dev. 0.08 170.47 26.25 30.32 0.00
Min 0.13 481.79 25.89 56.46 0.03
Max 0.41 1027.00 145.74 163.03 0.03

Tanzania Mean 0.11 402.52 55.38 52.99 0.03

Std. Dev. 0.03 85.20 9.60 9.16 0.00
Min 0.08 318.95 34.37 38.32 0.02
Max 0.19 596.80 75.11 77.55 0.03

Uganda Mean 0.06 336.90 50.74 32.87 0.03

Std. Dev. 0.02 105.10 10.12 7.89 0.00
Min 0.03 220.76 35.80 22.02 0.03
Max 0.10 538.15 71.33 54.91 0.04

Zambia Mean 0.29 670.43 954.31 327.24 0.03

Std. Dev. 0.13 80.14 294.50 108.22 0.00
Min 0.14 557.29 714.25 230.68 0.02
Max 0.61 814.00 1576.39 564.09 0.03

Zimbabwe Mean 1.08 649.05 328.46 421.47 0.02

Std. Dev. 0.31 96.10 109.76 81.29 0.01
Min 0.58 432.29 141.85 278.54 0.01
Max 1.61 863.05 544.10 571.27 0.04
Mean 1.12 1398.38 174.27 373.13 0.03

Full sample Std. Dev. 1.98 1858.91 242.11 571.52 0.01

Min 0.03 110.68 1.70 14.83 −0.03
Max 9.73 9455.52 1576.39 2938.28 0.06

Note: Data for Sudan excludes South Sudan for the years 2011 and 2012, mainly due to the unavailability of recent statistics for south Sudan (South Sudan was separated from Sudan in
2011).

consumption is supposed to lead to a reduction in greenhouse To handle the problem generated by the accumulation of observa-
pollutants. Therefore ψ3 is expected to be negative. Primary energy tions over time, Baltagi [8] suggests two possible options: 1) hetero-
consumption is to increase the emission of CO2; ψ4 is expected to be geneous regressions for each individual to avoid the homogeneity of
positive. Finally, the increase in population growth creates more coefficients that would be obtained with a single regression; and 2) the
demand for transportation, goods and services; which can accelerate application of time series processes to panels to deal with non-
the depletion of the environment. Thus, ψ5 is expected to be positive. stationarity and cointegrations among series. The panel cointegration
is an extension of time series analysis to panel data with large T. In
3.2. Panel cointegration approach addition to its capacity to pool long run information included in panels,
by allowing the short run dynamics and fixed effect to be heterogeneous
The application of panel cointegration analysis is justified by many across the panel. [39], the panel cointegration approach provides short
factors such as the dimension and characteristic of the data. With small and long run estimates. The process can be summarized as follows: the
T and large N usually found in microeconomic datasets such as surveys, preliminary investigation is a unit root test. If a series were found to be
the traditional panel methods (random effect, fixed effect, etc.) remains integrated, one would check the possible cointegration among variables
suitable. However, the analysis of panel data with T > N generates by running a cointegration test. Finnaly, if variables are cointegrated,
spurious results, since the feature of the data behavior tends to be close in other words if there is a long-run relationship among variables, one
to time series. The spuriousness increases when analyzing macroeco- would estimate the long-run coefficients.
nomic variables (which is the case for this study), as series in macro
data are usually non-stationary.

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4. Empirical results although series are stationary, there are still some series that are
non-stationary, which need to be appropriately addressed.
4.1. Panel unit root

Many techniques have been developed to estimate the order of

integration of series in panel data. Levin et al. [31] suggest a panel unit
root test (LLC) as an extension of the augmented Dickey-Fuller (ADF): 4.2. Cointegration tests
n
Δyit = ϕit ψi + ρyit −1 + ∑ ji=1 φij Δyi,t −j + ξit (3) The existence of I (1) in the series prompts analyzing the presence
of long-run equilibrium among the variables. Three types of tests are
where ϕit includes individual deterministic components (such as fixed applied to the variables of interest: Pedroni [38] panel and group
effect, trend, or a mixture of fixed effects and trend); ρ the autore- statistics, Kao [27] and Westerlund [50]. Each test uses different
gressive coefficient; ξit the error terms; and n the lag order. techniques and assumptions to compute the statistics, and is based
However, the LLC test assumes ρ constant across panels; which on the null hypothesis of no cointegration among series, against the
may suffer from loss of power [11]. Im et al. [21] extend the LLC test by alternative that series are cointegrated. Pedroni panel tests are based
allowing ρ to vary across panels: on the within dimension analysis, and statistics are computed by
n summing numerators and denominators along series, independently.
Δyit = ϕit ψi + ρi yit −1 + ∑ ji=1 φij Δyi,t −j + ξit (4) The panel statistics have four components: a panel-v statistic (which is
non-parametric, based on variances ratio), a panel-rho, panel-PP and
Breitung [11] proposes a test that corrects for bias generated in the
panel ADF statistics, similar to Phillips-Perron ρ statistics, Phillips-
application of LLC or IPS. The bias generally comes from the difference
Peron t-statistics and augmented Dickey-Fuller t-statistics in univariate
in size between N and T (LLC and IPS appear stronger when T is larger
time series, respectively. Pedroni group statistics are based on the
than N), or from the inclusion of an individual deterministic trend in
between dimension approach. Statistics are computed by dividing the
the tests. Besides, the Fisher tests (ADF and Phillips-Perron) suggested
numerator and denominator prior to summing over cross sections. The
by Choi [13] use the time series ADF and PP tests as a framework and
three computable statistics are group-rho, group-PP and group-ADF
application to panel data. The most distinctive feature is that the tests
statistics. The statistics are analogous to Phillips-Perron ρ statistics,
combine each series p-value resulting from their unit root tests, instead
Phillips-Peron t-statistics and augmented Dickey-Fuller (ADF) t-sta-
of averaging individual test statistics as suggested by IPS [21]. The
tistics in univariate time series.
Hadri [18] unit root test is based on the Lagrangian multiplier and uses
Kao t-statistic uses ADF as a framework, and assumes homogeneity
residuals derived from individual ordinary least squared regression on
in the panels. The statistic is derived from panel least squared dummy
deterministic components to compute the statistics. While LLC,
variable (LSDV) analysis. The Westerlund test provides four alterna-
Breitung IPS and Fisher test the null hypothesis that each series is
tives, Gt, Ga, Pt, and Pa. The test use an error correction model to
non-stationary across individuals (H0: ρi =0) against the alternative that
analyze the existence of cointegration in individual panels or in the
at least one individual in the series is stationary (H1: ρi < 0), the Hadri
whole panel. The rejection of Ga and Gt null hypothesis implies the
test assumes the opposite (null hypothesis: no unit root against the
existence of cointegration in at least one of the cross sections, as these
alternative that some or all series are non-stationary). In addition, the
two statistics use individual weighted average process and individual t-
LLC, Breitung and Hadri tests are based on homogeneity in the unit
statistic, respectively. On the contrary, Pa and Pt use a pooling process
root process ( ρi = ρ across panels), while the IPS and Fisher tests assume
over cross-section and the rejection null hypothesis implies the
the autoregressive coefficient to be heterogeneous.
existence of cointegration among variables in the panel, as a whole.
The panel unit root tests specified in this study include individual
Table 4 presents the results of the cointegration tests. In the
effects and the deterministic time trend. The Akaike information
Pedroni and Kao tests, the Schwarz Information Criterion (SIC)
criterion (AIC) is used to determine the country-specific lag length,
determines lag length, and the spectral estimation is based on
with a maximum lag set to 7. The spectral estimation is based on
Bartlett kernel with the bandwidth being determined by Newey and
Bartlett kernel and the bandwidth is determined by Newey and West
West automatic lag selection. The Pedroni test includes individual
automatic lag selection. As reported in Table 3, results provide fair
intercept and trend. In the Westerlund test, the number of lags is set to
evidence of stationarity of the variable. However, the LLC and Breitung
one. The results provide evidence of a long-run relationship among
tests do not reject the null hypothesis of non-stationarity of renewable
variables. Except rho (panel and group) and Westerlund Ga statistics,
energy consumption, although IPS, and the Fisher-type two tests (ADF
all the tests reject the null hypothesis of no cointegration. In other
and PP) reject the null hypothesis. In addition, the Phillips-Perron
words, variables are cointegrated. This suggests that the series tend to
Fisher-type test does not reject the null hypothesis of non-stationarity
move together in the long run, and the difference among them is
of the variable per capita CO2. Hadri z-statistic provides a challenging
stationary. The panel tests seem to have a higher power than the group
alternative. As the null hypothesis is the stationarity of the series
tests, confirming that pooling increases efficiency.
(rather than non-stationarity), the significant results suggest that

Table 3
Panel unit root.

LLC Breitung IPS Fisher Hadri

Variables t* stat t-stat W-stat ADF. Chi-sq PP. Chi-sq z-stat

Log per capita CO2 −15.05*** −3.21*** −17.23*** 379.96*** 1584.96 1.87**
Log per capita income −8.20*** −6.911*** −11.47*** 220.41*** 410.91*** 5.27***
(Log income per capita)^2 −8.51*** −7.13*** −11.13*** 214.01*** 413.21*** 4.59***
Log renewable energy consumption per capita −15.93 −6.77 −17.85*** 355.92*** 1245.28*** 7.73***
Log primary energy consumption per capita −15.23*** −4.53*** −17.63*** 365.59*** 1277.92*** 7.19***
Population growth 13.85 −2.83*** −7.00*** 142.54*** 318.08** 2.53***

** significane at 5%, *** significane at 1%.

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Table 4 Table 5
Cointegration tests. Estimations/robustness.

Cointegration test Statistics Dynamic System Dynamic Mean Pooled

OLS GMM Fixed Group Mean
Pedroni Panel-v 1.39* Effect Group
Panel-rho 0.84
Panel-PP −8.87*** Variables Log per Log per D. (Log D. (Log D. (Log
Panel-ADF −9.57*** capita capita per capita per capita per capita
Group-rho 3.86 CO2 CO2 CO2) CO2) CO2)
Group-PP −19.30***
Group-ADF −11.98*** Short-
Kao t −7.58*** run
Westerlund Gt −2.935*** Constant −1.466 −1.259*** −23.575 −2.055***
Ga −6.672 (−1.211) (−0.415) (−38.989) (−0.416)
Pt −13.138*** Log income per −0.527*
Pa −11.207** capita
(−0.309)
Note: Pedroni and Kao tests are generated on Eviews, while Westerlund test is generated (Log income 0.045*
on Stata with the command “xtwest”. The number of bootstrap replicates in the per capita)
Westerlund test has been reduced from the maximum of 800 to 300 to obtain the result. ^2
*
Significance at 10%. (−0.025)
**
significance at 5%.; Log renewable −0.100***
***
significance at 1%. energy
consump-
tion per
4.3. Estimation/robustness capita
(−0.03)
This section constitutes the core of the study. Having found that Log primary 0.558***
variables are cointegrated, the final step is to estimate the relationship. energy
consump-
To get more acumen on the findings, the analysis includes a short-run
tion per
estimation. In addition, a series of robustness would help ascertain the capita
relevance of the outcome. Two classical long-run estimations are (−0.129)
commonly used in the panel cointegration analysis: the dynamic OLS Population −0.008
growth
(DOLS) and the fully modified OLS (FMOLS) developed by Pedroni
(−0.014)
[39,40] and Kao and Chiang [28]. However, as Kao and Chiang [28] use L. (Log per 0.445*** −0.273*** −0.801*** −0.347***
a Monte Carlo simulation to posit that the finite-sample properties of capita CO2)
the DOLS estimator are higher than the FMOLS properties, the (−0.079) (−0.024) (−0.063) (−0.07)
analysis for this study favors the DOLS over FMOLS. D. (Log per −0.519 5.335 7.242*
capita
The DOLS uses leads and lags of the first difference regressors to
income)
estimate the long-run relation among variables. It assumes indepen- (−0.525) (−6.312) (−3.797)
dence between cross sections. However, the test does not provide any D. (Log income 0.049 −0.355 −0.530*
information on the short-run estimates. To obtain the short-run per capita)
^2
estimates, as well to ascertain the relevance of the findings, a set of
(−0.04) (−0.475) (−0.308)
robustness tests are added to the baseline estimator (DOLS). The list of D. (Log −0.033** −0.110* −0.292***
tests includes: the system GMM, the Dynamic fixed effect (DFE), the renewable
Pooled mean Group (PMG) and the Mean Group (MG) estimators. energy
Each of the tests possesses a particular advantage and proceeds consump-
tion per
differently to compute the parameters.
capita)
The system GMM deals with the issue of endogeneity by treating (−0.014) (−0.06) (−0.096)
each variable as endogenous, and instruments the variables by their D. (Log primary 0.452*** 0.095 0.718***
own lag (with the possibility to add external instruments). However, energy
consump-
the estimator is more efficient when T < N [42]. The DFE, MG and
tion per
PMG are closely related. The DFE assumes the slope of the cointegrat- capita)
ing vectors and error variances to be the same across panels. In other (−0.045) (−0.098) (−0.17)
words, all series are pooled, making the slope parameter homogeneous. D. (Population −0.011 0.321 0.055
Only intercepts are specific to each panel. The MG averages slopes growth)
(−0.011) (−0.33) (−0.118)
across panels and the intercept. Error variances are allowed to vary
Observations 743 743 743 743
across panels. Finally, the PMG is an intermediate between the MG and R-squared
DFE in the sense that it averages and pools the coefficients across Instruments 473
panels. The short run coefficients are specific to each cross section, AR1 0.014
while the long run effect of the coefficients are constrained to be AR2 0.277
Hausman 0.019
homogeneous across panels. Long-run
Results of the estimation as well as the robustness tests are Log per capita 0.21 −0.95* −0.519 6.147 −0.117
presented in Table 5. The tests report also the short-run estimations. income
The DOLS provides evidence that renewable energy is an efficient (−0.461) (−0.525) (−11.478) (−0.173)
(Log income 0.017 0.08* 0.049 −0.453 0.007
substitute for conventional fossil-fuelled energy. Renewable energy
per capita)
allows meeting households’ need for energy and contributes to the ^2
improvement of air quality. A 1% increase in the consumption of (−0.034) (−0.04) (−0.816) (−0.01)
renewable energy reduces CO2 emissions by 0.13%, everything held Log renewable −0.130*** −0.18*** −0.130*** −0.122 −0.015**
constant elsewhere. The effect of renewable energy on CO2 emissions (continued on next page)

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Table 5 (continued) The EKC hypothesis seems to be confirmed for only the PMG in the
short run. The coefficient is positive (but overestimated) for income per
Dynamic System Dynamic Mean Pooled
capita, and negative the square of income per capita. Population
OLS GMM Fixed Group Mean
Effect Group growth however, has no effect on CO2 emissions (GMM, DFE and
PMG).
Variables Log per Log per D. (Log D. (Log D. (Log
capita capita per capita per capita per capita 5. Concluding remarks
CO2 CO2 CO2) CO2) CO2)

energy This paper attempted to assess the relevance of possible factors that
consump- deplete environment quality, by assessing the EKC hypothesis and
tion per analyzing the effectiveness of renewable energy in Africa. For this
capita
(−0.024) (−0.014) (−0.144) (−0.006)
purpose, the analysis used a panel cointegration approach and robust-
Log primary 0.855*** 1.01*** 0.855*** 1.279*** 1.093*** ness tests to estimate the short and long-run relationship among
energy variables. Results provide clear evidence that renewable energy, with
consump- a negative effect on CO2 emissions, and increasing impact in the long
tion per
run, remains an efficient substitute for conventional energy. However,
capita
(−0.063) (−0.045) (−0.136) (−0.028) this impact is undermined by the higher effect of primary energy
Population 0.026* −0.014 −0.011 −0.063 0.008 consumption on CO2 emissions, implying that tremendous effort
growth should be made at both the national and international level for a
(−0.014) (−0.011) (−0.04) (−0.007) sustainable impact of renewable energy. Additionally, although the
EKC is not completely confirmed for the sample of countries, income
Note: The GMM long-run coefficient is given by β /(1 − α ) where β is the short-term
coefficient (associated with the variable of interest) and α the coefficient of the lagged
per capita is found to contribute to CO2 emissions, confirming that at
dependent variable; the system GMM generates 473 instruments for 743 observations; the earlier stage of development the need for higher income, and the
the Dynamic OLS includes 1 leads and 1 lag. The test is generated on Stata with the lack of awareness of environmental issues lead to higher depletion of
command “xtdolshm” (prior to running this command, the 6 Mata functions should be air quality (first half of EKC). The unequal repartition of income across
installed with the command “ssc install ltimbimata”; the Mean Group, Pooled Mean Africa could explain the unconvincing result for the EKC hypothesis. A
Group and Dynamic Fixed Effect are all obtained with the command “xtpmg”. In
country case study, or a region-based approach would bring different
addition, for all the three estimates, the coefficient of the lagged dependent variable is
given by the error correction term.
insights. Finally, demography, with its perverse effect on air quality,
*
Significance at 10%. constitutes an additional challenge for Africa.
**
significance at 5%.
***
significance at 1%. Appendix A. Supporting information

seems to be outweighed by the preserve effects of usual energy Supplementary data associated with this article can be found in the
(primary energy consumption). In fact, a 1% increment in primary online version at doi:10.1016/j.rser.2016.10.018.
energy consumption increases CO2 emissions by 0.85%, implying that
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