Income, environmental considerations, and sustainable energy consumption in Africa

Evidence on income as a crucial driver of renewable energy consumption in Africa is mixed. But hydropower accounts for over 90% of renewable energy in sub-Sahara Africa alone. Yet, empirical evidence suggests that hydropower may not be as environmentally sustainable as believed and, as a legacy source of energy in Africa, may not accurately reflect attitudes on renewable energy motivated by environmental concerns. This paper examines the role played by economic performance in the rising sustainable energy consumption in Africa, focusing on the renewable energy sources that are compatible with sustainable development. The difference generalized method of moments, fully modified ordinary least squares, and dynamic ordinary least squares are employed to estimate the statistical significance of income, environmental sustainability proxy, and prices as important drivers of sustainable energy consumption in a panel of 10 African countries for the period 2000-2011a time frame characterized by a rapid rise in renewables as a priority in environmental policy. With timing and measurement considerations on sources of renewables, results indicate that in contrast to recent literature, the rise in sustainable energy consumption in Africa is strongly driven by rising domestic incomes. In line with literature, however, there is a generally positive, albeit statistically insignificant relationship between sustainable energy consumption and levels of carbon emissions. Oil prices in real terms also correlate with sustainable energy consumption. Available data also show that countries with low energy security also coincidentally tend to have high small hydropower capacity, providing potential for sustainably reducing energy insecurity.