Carbon Neutrality in the Middle East and North Africa: The Roles of Renewable Energy, Economic Growth, and Government Effectiveness

Abstract

Carbon neutrality is a 21st-century priority area, with the Middle East and North Africa (MENA) countries making significant investments in renewable energy and climate mitigation initiatives to attain it. However, carbon neutrality research in the MENA region is under-developed, particularly when considering the roles of renewable energy, economic growth, and effectiveness of government. To address this gap, this research investigates the roles of renewable energy, economic growth, and government effectiveness toward the MENA region’s carbon neutrality goal. We implemented heterogeneous and second-generation panel data techniques that are resilient to cross-sectional dependency and slope heterogeneity to panel data spanning 16 MENA countries from 1996 to 2018. We discovered that MENA data are cross-sectionally dependent, heterogeneous, and cointegrated. We found that government effectiveness and renewable energy bring carbon neutrality closer, but economic growth initially delays it. We detected Environmental Kuznets Curve (EKC) in the MENA region, specifically in the High-Income Countries. Although there were signs of EKC in the Middle-Income Countries, this was not significantly validated. Finally, we found a one-way causal link from government effectiveness and renewable energy to carbon neutrality but a feedback mechanism between economic growth and carbon neutrality in the MENA region. As a result of these findings, it is recommended that the MENA region’s policymakers prioritize renewable energies and improve the effectiveness of government to drive economic growth toward the carbon neutrality goal.

Achieving Carbon Neutrality in the Brics Countries: the Roles of Innovation, Renewable Energy, Economic Growth and Carbon Taxes

“…CAN (outcome variable), is broadly measured by CO2 and CH4. CAN is determined either by CO2 only or greenhouse gases, not withstanding, we chose CO2 and CH4 as a proxy for CAN in this paper which is consistent with literature (Wu et al, 2023, Kong, et al, 2022Khan et al, 2022), given that reduction in CO2 and CH4 promote CAN agenda. & Ndzembanteh (2020).…”

“…INN is selected for this study since it is believed that INN is responding to environmental changes and explains the CO2 and CH4 variations (Joe et al, 2024;Jiang & Khan, 2023;Wusiman & Ndzembanteh 2020). Also, the technique effect indicates that INN lowers CO2 and CH4 due to more investment in R&D and PAT result in strict industrial standards and environmental laws, together with the replacement of outdated and highly polluting technology with new, green ones (Kong, et al, 2022).…”

“…According to the composition impact, ECG could lessen or exacerbate CO2 and CH4 based on changes in economic structure. A structural change from agriculture to industrial activities increase CO2 and CH4 when a nation's ECG increases (Kong, et al, 2022).…”

“…Therefore, we account for urbanization (URB) in our work. Researchers like Khan et al, (2022) and Kong, et al, (2022) assist the rationale for employing URB during the shift to CAN. Literature justifies that degradation of the environment ascends due to of expanding industrialization.…”

“…Additionally, in order to address climate change urgently, the UN has presented the Sustainable Development Goals (SDGs), which are expected to be accomplished by 2030. These goals highlight the necessity for easily accessible and clean energy, and tenacious economic development, and innovation 8,9,and 13) (Kong, et al, 2022). Therefore, the only method to successfully reduce climate change is to limit CO2 and CH4.…”