International tourism, exchange rate, and renewable energy: Do they boost or burden efforts towards a low carbon economy in selected African countries?

Transitioning to a carbon‐neutral renewable energy (REN) option to decarbonize ecosystems and mitigate carbon dioxide (CO2) emissions and the negative impacts of climate change is consistent with United Nations Sustainable Development Goals 7 and 13. Scholars have identified natural resource wealth and institutions as critical factors in the REN transition in resource‐rich countries. Financial barriers are arguably the most significant impediments to transitioning to REN, as it is more capital‐intensive and costly to produce, invest in, and use than traditional fossil fuel‐based energy. Meanwhile, weak institutions and corruption in most resource‐rich countries culminate in the resource curse phenomenon and the mismanagement of natural resource wealth. It implies that institutions (weak or strong) modify the natural resource rent contribution to the REN transition. Previous research has paid little attention to the impact of the interplay between natural resources and institutional quality on the REN transition in resource‐rich African countries. This study examines how institutions moderate the contribution of natural resource wealth to accelerating or inhibiting the REN switch in resource‐rich African countries for the period 2000–2021, using fully modified ordinary least squares, a Driscoll–Kraay nonparametric covariance matrix, and moments‐based quantile regression estimators. This study departs from earlier studies by determining the institutional quality threshold above which institutions significantly stimulate natural resource rents to accelerate Africa's REN transition. The findings indicate that institutions in resource‐rich African countries breed inefficient bureaucracies and corruption in natural resource rent administration. These undermine the ability of natural resource incomes to facilitate a shift to renewable energy sources. The threshold analyses indicate that most resource‐rich African countries operate below the institutional quality threshold. This finding corroborates that inefficient institutions abet natural resource rent mismanagement and hinder the channeling of resource income toward the REN transition. The findings' policy implications are robustly articulated and outlined.

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Pathways for China's sustainable energy transition: Examining the effects of exchange rate volatility on renewable energy investment

Li,

Zheng,

Majeed

2023

Energy & Environment

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The relationship between exchange rate volatility (ERV) and other macroeconomic factors, including trade flows, domestic production, inflation, money demand, and economic growth, has remained a topic of a large number of studies in international finance. However, the research question that the past empirics have overlooked is whether ERV has any role in helping an emerging economy like China in its journey toward a renewable energy transition. To answer this question, this analysis intends to scrutinize the nexus between ERV and renewable energy investment (REI) in China over 1991Q1-2021Q4. Moreover, due to the asymmetric behavior of ERV, we have based our analysis on the asymmetric assumption. For analyzing the short and long-run impacts of ERV on REI in China, we used the linear autoregressive distributed lag (ARDL) and nonlinear ARDL methods. In the long term, the ARDL model predicts that stricter environmental policies and higher GDP will lead to more investment in renewable energy. As far as the nonlinear model is concerned, the long-term negative change in ERV does not affect REIs, whereas a long-term positive change in ERV reduces such investments. Likewise, unfavorable short-term exchange rate shocks encourage REI while positive short-term shocks discourage such development. Moreover, investment in renewable energy is bolstered by GDP, environmental policy strictness, and financial development, but is dampened by CO2 emissions in the short term in both models. On the basis of these results, we suggest that policymakers should consider implementing measures to stabilize exchange rates to promote investment in renewable energy.

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International tourism, exchange rate, and renewable energy: Do they boost or burden efforts towards a low carbon economy in selected African countries?

Cited by 3 publications

References 78 publications

Multifaceted natural resources and green energy transformation for sustainable industrial development

Multifaceted natural resources and green energy transformation for sustainable industrial development

Do natural resource rents aid renewable energy transition in resource‐rich African countries? The roles of institutional quality and its threshold

Pathways for China's sustainable energy transition: Examining the effects of exchange rate volatility on renewable energy investment

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