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This article discusses the residential electricity (RE) demand in Tunisia as a function of household disposable real Gross Domestic Product (GDP), the price of electricity (PE) and the degree of urbanization (U) spanning the period 1980–2018. To do that, the Autoregressive Distributed Lag (ARDL) bound model and Granger causality test are employed to examine the influencing factors of the changes in RE demand, and to discuss the directions of short and long‐run causalities among the variables. The empirical result shows that all variables are integrated of order one, I (1). The Fisher statistics of the Wald test confirms that variables are cointegrated. Long‐run elasticities suggest that, in the long‐run, electricity price and urbanization have a significant and positive impact on RE demand, while real GDP contributes insignificantly to the decrease of RE demand in Tunisia. Granger causality empirics suggests that in short run, there is bidirectional causality between RE demand and electricity price, and between RE demand and urbanization, and a unidirectional causality from real GDP and urbanization to electricity price, and from real GDP to urbanization.

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Currently, COVID-19 due to emergence of various variants shows no signs of slowing down and has affected every aspect of life with significant negative impact on economic and energy structures around the world. As a result, the governments around the world have introduced policy responses to help businesses and industrial units to overcome the consequences of compliance with COVID-19 strategies. Our analysis indicates that global energy sector is one of the most severely affected industries as energy price mechanisms, energy demand, and energy supply have shown great uncertainty under these unprecedented economic and social changes. In this regard, we provide brief overview of demand, supply, and pricing structure of energy products as well as policy mechanisms to provide better outlook about how industrial sector can cope with energy consumption in the post pandemic era. We further propose changes in the existing policy mechanisms so that transition towards renewable energy sources under different environmental agreements can be achieved. Moreover, as a reference, we outline major challenges and policy recommendations to ease energy transition from fossil fuels to environmental friendly energy mix.

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ABSTRACT

The World is confronted with a slew of environmental issues, one of which is how to attenuate the detrimental impacts of CO2 emissions-induced climate change. The ever-increasing use of energy is eroding natural resources to the point that our economic future may be jeopardized. The Tunisian economic growth indicates the excellent performance in the industrial sector as the minimum required input for these developments necessitates additional energy consumption, resulting in increased CO2 emissions and environmental degradation. This study explores the role of energy efficiency, urbanization, economic growth, and natural gas energy usage in the industrial sector on carbon dioxide (CO2) emissions of Tunisia. The research mainly employs the Vector Autoregressive Model (VAR) to examine the factors driving the evolution of CO2 emissions through the industrial sector from 2000 to 2018. The findings assess that natural gas as an energy source and efficiency are crucial for reducing CO2 emissions. The study has shown the existence of the Environmental Kuznets Curve (EKC), which demonstrates that economic development in Tunisia has an inverted U-shape connection with CO2 emissions. The results indicate that energy consumption and GDP significantly affect CO2 emissions due to large-scale population movements and industrial structure transformation. In contrast, energy efficiency plays a dominant role in decreasing CO2 emissions. The article will assist economic decision-makers and related authorities in formulating an appropriate energy policy for the industrial sector based on the study's outcomes to protect environmental degradation in the long run by reducing carbon emissions.

The World is confronted with a slew of environmental issues, one of which is how to attenuate the detrimental impacts of CO2 emissions-induced climate change. The ever-increasing use of energy is eroding natural resources to the point that our economic future may be jeopardized. The Tunisian economic growth indicates the excellent performance in the industrial sector as the minimum required input for these developments necessitates additional energy consumption, resulting in increased CO2 emissions and environmental degradation. This study explores the role of energy efficiency, urbanization, economic growth, and natural gas energy usage in the industrial sector on carbon dioxide (CO2) emissions of Tunisia. The research mainly employs the Vector Autoregressive Model (VAR) to examine the factors driving the evolution of CO2 emissions through the industrial sector from 2000 to 2018. The findings assess that natural gas as an energy source and efficiency are crucial for reducing CO2 emissions. The study has shown the existence of the Environmental Kuznets Curve (EKC), which demonstrates that economic development in Tunisia has an inverted U-shape connection with CO2 emissions. The results indicate that energy consumption and GDP significantly affect CO2 emissions due to large-scale population movements and industrial structure transformation. In contrast, energy efficiency plays a dominant role in decreasing CO2 emissions. The article will assist economic decision-makers and related authorities in formulating an appropriate energy policy for the industrial sector based on the study's outcomes to protect environmental degradation in the long run by reducing carbon emissions.