Green Energy Demand and Financial Development: Evidence From Africa

Introduction

Demand for green energy sources (GES) and related technology has become a subject of scientific research in the 21^st century. Although, experts have espoused several dependable, and leading-edge strategies in leveraging GES, the process of navigating from non-green energy sources to GES, particularly in emerging economies, has been quite sluggish. Though, some of the emerging economies have vast potential and significant GES, as evidenced in the availability of immense wind and solar energies. These wind and solar energies extend to wide ecological areas and may not require a centralized method of distribution. In spite of this prospect, utilization of green energy has not been maximized by these emerging economies. With rising population in these countries accompanied by a surge in energy and spiralling energy cost, an energy crunch has ensued resulting in the reliance on non-green energy sources. Even though traditional energy is the main source of worldwide energy mix, it is nonetheless the principal means of releasing greenhouse gases into the atmosphere.

The consequence of this is the atmospheric catastrophe happening lately like global warming. The advancement of GES is considered as one of the vital initiatives meant to reduce CO₂ emissions. This is to complement the search for alternatives in powering the mining sector where the use of gas, coal, radioactive ore and oil has remained dominant with its attendant contribution greenhouse emissions.

Small hydropower, geothermal and wind energies are used alternatively in other countries to stem the tide of CO₂ emissions. The years 2014-2024 have been declared by the UN General Assembly as the year of Sustainable Energy for All. The UN General Assembly has highlighted the impact of energy on long-term growth and the strengthening of the post-2015 expansion plan. Thus, green energy strategies, production, and financing of green energy sources have taken centre stage in emerging economies. Investment strategies have drifted from conservative governments and foreign sponsors to private, typically local commerce and financial institutions (Martinot et al., 2002; REN21, 2014).

The adoption of green energy sources is rising between public organizations, industry, NGOs, and businesses. Presently, the outbreak of the COVID-19 pandemic is hampering the world of energy. As there has been a rapid increment in the level of conventional fuel prices, the machines and engines that use a large share of green energy sources are operating effectively and not been affected by the pandemic.

The need to achieve sustainable development has sparked the quest for embracing development initiatives that put climate change in the spotlight. Consequently, countries are adopting development blueprints will lead to sustainable development through the use of GES that can accelerate economic growth with minimum adverse impact on the climate. Using the GES enables us to classify the energy mix and enhance energy security, resulting in the reduction of reliance on conventional fuels and greenhouse gases (Rifkin, 2011). When it comes to curtailing reliance on traditional fuels, technology is the answer (Nasreen & Rafay, 2022). the International Energy Agency has proffered GES technology as the ultimate solution to finding a lasting solution. The GES is considerably being regarded as an asset that is able to offer economic potential by reducing reliance on imported fossil fuels, increasing air quality and health care, improving access to energy safety, enhancing economic growth, and decreasing unemployment. In several developing nations, the creation of helpful actions for the enactment of the GES is considered paramount. These nations accept support policies and conduct experiments. By 2013, developing nations and states in which a market economy was developing were at the forefront in enhancing policies to aid renewable energy sources (REN21, 2014). GES assistance policies usually entail the use of administrative and economic instruments such as direct investments towards enhancing infrastructure, which comprises greenhouse gas emission shares (GHGs) or green certificates, tax or financial inducements, and market initiatives. It has been discovered that economic in addition to financial instruments have a solid impact on other energy creation in developing countries (Pfeiffer & Mulder, 2013). The renewable energy space is wide and offer opportunities for investment to curb climate change. However, it is mostly bedevilled by inadequate financial investments with most developing economies suffering from gaps in alternative energy financing (Lindlein & Mostert, 2005).