The effect of energy and urbanisation on carbon dioxide emissions: evidence from Ghana

Abstract

Concerned with the declining trend of renewable energy consumption as well as a change in the energy mix for electricity production amidst growing urban population and carbon dioxide (CO2) emissions in Ghana, this study examines the effect of urbanisation and energy on carbon dioxide emissions in Ghana within the framework of the Environmental Kuznets Curve (EKC) Hypothesis over the period 1971–2013. Estimation results from Fully Modified OLS confirm the presence of the EKC hypothesis over the period for Ghana. In addition, combustible renewables and waste consumption, electricity production from hydro and trade openness are found to reduce carbon dioxide emission while fossil fuel consumption, electricity production from fossil fuels, urbanisation and industrialisation increase carbon dioxide emission for Ghana. The study again finds that an interaction between urbanisation and combustible renewables and waste consumption, however, has a positive effect on CO2 while the interaction between urbanisation and fossil fuel consumption has a negative effect. Further analysis using the Engel–Granger causality test, the variance decomposition and impulse response functions are embarked. The outcome of the study implies the need to pursue the implementation of the low‐carbon development strategy.

The long-run effects of energy use, urbanization and financial development on carbon dioxide emissions

“…According to the compact theory, the concentration of people and economic activities at the urban centers propels economies of scale (Elliott et al , 2014) which causes emission levels to decline. Empirically, Kwakwa and Alhassan (2018), Adom et al (2018) and Amuakwa-Mensah and Adom (2017) all reported urbanization has a positive effect on Ghana’s carbon emission. Also, Sheng and Guo (2016), Behera and Vishnu (2011) and Sinha et al (2017) found the emission effect of urbanization to be positive for China, India and N-11 economies, respectively.…”

“…The justification for this study is on the premise that initial studies that explored the effect of energy on carbon emissions focused largely on (primary/total) energy usage (Chebbi and Boujelbene, 2008; Kwakwa and Adu, 2016; Sun, 2012; Zhou et al , 2018). In recent times, however, some researchers have devoted attention to explore the effect of other energy indicators such as energy intensity/efficiency, renewable energy and nonrenewable energy usage (Kwakwa and Alhassan, 2018; Belaïd and Zrelli, 2016; Dogan and seker, 2016; Dar and Asif, 2019). These studies have been selective by choosing particular energy types for the studies.…”

“…Thus, data sets for different energy types and different countries have been used by existing studies and have found conflicting results (refer to Section 2 for a review of the findings). For instance, although Kwakwa and Alhassan (2018) looked at the effect of both renewable and nonrenewable energy consumption and production on carbon emissions, they did not consider the effect of natural gas and energy intensity/efficiency for Ghana. Dong et al (2017) also limited their study to renewable consumption and natural gas, while Dogan and seker (2016) focused on electricity production from a renewable and nonrenewable sources.…”

“…For instance, York and McGee (2017) argued that the interaction between income and energy may influence the eventual impact of income on carbon emission. Similarly, Kwakwa and Alhassan (2018) argued and examined the interaction effect between energy and urbanization on carbon emission. Balsalobre-Lorente et al (2019a) analyzed the interaction effects between corruption and energy and that of corruption and income; Balsalobre-Lorente et al (2019b) looked that interaction between energy use and income; and Adams et al (2016) analyzed the interactive term between urbanization and democracy.…”

The carbon dioxide emissions effect of income growth, electricity consumption and electricity power crisis

“…However, high consumption of energy increases carbon emissions. It is in this light that beyond looking at the relationship between energy and economic growth (Adom, 2013; Kwakwa, 2012; Kwakwa and Aboagye, 2014), some further look at the emission effect of energy (Kwakwa and Alhassan, 2018; Rahman et al , 2020; Aboagye, 2019; Kirikkaleli and Adebayo, 2021). Findings from such studies direct policymaking toward efficient energy consumption or the development of renewable energy resources.…”