Economic Growth, Energy Consumption, and Carbon Emissions: The Case of Nigeria

Economic Growth, Energy Consumption, and Carbon Emissions: The Case of Nigeria

David Oluseun Olayungbo, Ayodele Adekunle Faiyetole, Adenike Anike Olayungbo
Copyright: © 2022 |Pages: 18
DOI: 10.4018/978-1-7998-8210-7.ch010
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Abstract

This chapter examines the interactions among energy consumption, economic growth, and carbon emissions in Nigeria for the period 1971-2018. The study adopts time-varying parameter vector auto regression (TVP-VAR) to explore the dynamic effects among the variables of interest. After analyzing the statistical properties of the data with Markov chain Monte Carlo (MCMC), a causal relationship between energy consumption and economic growth was found. It is also found that the environmental Kuznets curve (EKC) hypothesis is valid for Nigeria. It implies that as the economy of Nigeria grew, emissions were reduced. It is recommended that the Nigerian government should continue pursuing emissions reduction policies, such as the nationally determined contributions (NDCs), and should also ensure the appropriate energy mix to enhance industrialization drive and improve environmental quality.
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Literature Review

The controversial EKC is a hypothesized relationship between various indicators of environmental degradation and income per capita. Typical EKC shows that environmental degradation increases in the early stages of economic growth, but beyond some levels of income per capita of economic growth, the trend reverses, leading to an environmental improvement (Stern, 2004; Cole et al., 1997; Grossman & Kruger, 1995). At these points, societies are environmentally aware, and countries can implement costly mitigative strategies, such as acquiring expensive technology for emission mitigation (Faiyetole, 2018; Faiyetole & Adesina, 2017; Kaika & Zervas, 2013; Dinda, 2004; Dritsaki & Dritsaki, 2014; Grossman & Kruger, 1995). The EKC is based on the hypothesis of a U-inverted relationship between emissions and income levels (Kuznets, 1955). It implies that plotting an environmental impact indicator (CO2 per capita) against a function of income (GDP per capita) should follow an inverted-U or N-shaped curve (Panayotou, 2003, 1997; Moomaw & Unruh, 1997).

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