A multivariate causality analysis of CO2 emission, electricity consumption, and economic growth: Evidence from Western and Central Africa

Samuel Asante Gyamerah; Luis Alberiko Gil-Alana

doi:10.1016/j.heliyon.2023.e12858

A multivariate causality analysis of CO₂ emission, electricity consumption, and economic growth: Evidence from Western and Central Africa

Heliyon. 2023 Jan 7;9(1):e12858. doi: 10.1016/j.heliyon.2023.e12858. eCollection 2023 Jan.

Authors

Samuel Asante Gyamerah^{1

2}, Luis Alberiko Gil-Alana^{3

4}

Affiliations

¹ Department of Statistics and Actuarial Science, Kwame Nkrumah University of Science and Technology, Kumasi, Ghana.
² Laboratory for Interdisciplinary Statistical Analysis - Kwame Nkrumah University of Science and Technology, Kumasi, Ghana.
³ Faculty of Economics, University of Navarra, Pamplona, Spain.
⁴ Universidad Francisco de Vitoria, Madrid, Spain.

Abstract

The vector error correction model is used to examine the short- and long-run impacts of electricity consumption and economic growth on CO₂ emissions in Western and Central Africa from 1970 to 2020. This paper adopted time series vector error correction model (VECM) approach to conduct stationarity test, cointegration test, stability test, and Granger causality test. Cointegration tests are used to examine the long-run impact of electricity consumption and economic growth on CO₂ emissions. It was revealed that CO₂ emission, electricity consumption and economic growth are co-integrated. Electricity consumption and economic growth have a significant and positive effect on CO₂ emission. The study also revealed that the adjustment process is not driven by electricity consumption, and anytime there is a deviation from the long-run equilibrium, economic growth and CO₂ emission adjust to restore the long-run equilibrium. From the short-run Granger causality, electricity consumption and economic growth do not Granger cause CO₂ emissions. However, past values of CO₂ emissions have an effect on the present value of economic growth. Generally, long-run dynamics of electricity consumption and economic growth were established to have a greater impact on CO₂ emission than the short-run dynamics. Hence, it is important to promote green economic concepts in the area.

Keywords: Africa; CO2 emissions; Economic growth; Electricity consumption; Vector error correction model.