This study explores the impact of foreign direct investment (FDI), renewable energy, gross capital formation, population growth, gross domestic product (GDP), and the square of GDP on carbon dioxide (CO2) emissions in Somalia between 1990 and 2019. To investigate the short- and long-run elasticity of environmental degradation and the other variables, the autoregressive distributed lag (ARDL) model is employed. In Somalia, the long-run coefficients of the ARDL model indicate that renewable energy contributes negatively to environmental degradation. At the same time, domestic investment and population growth undermine the quality of the environment. Furthermore, the FMOLS results validate the existence of EKC in Somalia. The Granger causality test is also applied to investigate the causal relationship between the variables. Despite this, there was no evidence that FDI and renewable energy are causally related to environmental degradation. Based on our empirical assessment, the Somali government should encourage foreign direct investment, especially in technology-intensive and environmentally friendly industries, and pay increased attention to the improvement and consumption of renewable energy sources.

This study investigated the relationship between energy consumption, carbon dioxide emissions, and macroeconomic variables in Somalia with data spanning from 1990 to 2019 using ARDL model. The study found a negative long-run relationship between carbon dioxide emissions and energy consumption in Somalia, suggesting that improving access to clean energy can reduce the gradual rise of carbon dioxide emissions. The study also found that rising industrial value-added had a significant positive impact on energy consumption. Furthermore, findings from Cholesky's variance decomposition showed that 13.13% of future fluctuations in energy consumption are due to shocks in carbon dioxide emission, 33.63% of future fluctuations in carbon dioxide emissions are due to shocks in energy consumption, 40.63% of future fluctuations in industrialization are due to shocks in energy consumption and 41.23% of future fluctuations in population are due to shocks in energy consumption. There was evidence of a bidirectional causality between: energy consumption and population. The study suggests adding renewable energy technologies to the energy portfolio. This would help reduce reliance on unstable energy sources and reduce the chance that changes in commodity prices will interrupt the energy supply, which eventually would help reduce the effects of climate change.