TY - JOUR
T1 - Carbon emission effect of renewable energy utilization, fiscal development, and foreign direct investment in South Africa
AU - Ekwueme, Daberechı Chıkezıe
AU - Zoaka, Joshua Dzankar
AU - Alola, Andrew Adewale
N1 - Publisher Copyright:
© 2021, The Author(s), under exclusive licence to Springer-Verlag GmbH Germany, part of Springer Nature.
PY - 2021/8/1
Y1 - 2021/8/1
N2 - In recent times, the persistent global environmental challenges have paved the way for the underpinning of climate change within the perspective of financial performance. Given this motivation, the current study further examines the interaction of foreign direct investment, fiscal development, renewable energy usage, economic growth, and CO2 outrush of South Africa (1970 to 2014). The unit root test of Zivot-Andrews and augmented Dickey-Fuller (ADF), vector autoregressive (VAR), and Pesaran ARDL (autoregressive distributed lag bounds) approach were employed in the data analysis. The existence of a statistically significant correlation among the series was detected by the Johansen multivariate cointegration in long term and subsequently by the long run coefficient of the vector error correction model test result. Furthermore, in the long run, significant positive correlation existed among renewable energy, GDP (economic growth), development in finance (FD), and CO2 outrush. While in the short run, GDP and development in finance have a statistically positive correlation with outrush of CO2; renewable energy consumption exerts a negative relationship on CO2 in the short run. The Granger causality results show overall causality among the series; proof of bidirectional stimulus running from renewable energy to economic growth; foreign direct investment to trade; and also one causality direction running among the other variables. The policy twist is that the implementation of energy efficiency programs currently pursued by the South African government to enhance renewable energy consumption should be facilitated with more determination. In addition, the government and policymakers should thrive to align these energy efficiency programs with other macroeconomic and financial variables such as foreign direct investment (FDI), fiscal development, and trade openness to achieve minimum CO2 outrush level in South Africa, thus yielding environmental sustainability.
AB - In recent times, the persistent global environmental challenges have paved the way for the underpinning of climate change within the perspective of financial performance. Given this motivation, the current study further examines the interaction of foreign direct investment, fiscal development, renewable energy usage, economic growth, and CO2 outrush of South Africa (1970 to 2014). The unit root test of Zivot-Andrews and augmented Dickey-Fuller (ADF), vector autoregressive (VAR), and Pesaran ARDL (autoregressive distributed lag bounds) approach were employed in the data analysis. The existence of a statistically significant correlation among the series was detected by the Johansen multivariate cointegration in long term and subsequently by the long run coefficient of the vector error correction model test result. Furthermore, in the long run, significant positive correlation existed among renewable energy, GDP (economic growth), development in finance (FD), and CO2 outrush. While in the short run, GDP and development in finance have a statistically positive correlation with outrush of CO2; renewable energy consumption exerts a negative relationship on CO2 in the short run. The Granger causality results show overall causality among the series; proof of bidirectional stimulus running from renewable energy to economic growth; foreign direct investment to trade; and also one causality direction running among the other variables. The policy twist is that the implementation of energy efficiency programs currently pursued by the South African government to enhance renewable energy consumption should be facilitated with more determination. In addition, the government and policymakers should thrive to align these energy efficiency programs with other macroeconomic and financial variables such as foreign direct investment (FDI), fiscal development, and trade openness to achieve minimum CO2 outrush level in South Africa, thus yielding environmental sustainability.
KW - Carbon emissions
KW - Foreign direct investment
KW - South Africa
KW - Fiscal development
KW - Renewable energy
UR - http://www.scopus.com/inward/record.url?scp=85103399990&partnerID=8YFLogxK
U2 - 10.1007/s11356-021-13510-8
DO - 10.1007/s11356-021-13510-8
M3 - Article
C2 - 33791964
AN - SCOPUS:85103399990
VL - 28
SP - 41821
EP - 41833
JO - Environmental Science and Pollution Research
JF - Environmental Science and Pollution Research
SN - 0944-1344
IS - 31
ER -