In a recent study, researchers from Near East University evaluated the factors influencing renewable energy consumption (REC) in South Africa from 1970 to 2020. This study aims to unveil the impact of foreign direct investment (FDI), economic growth, and banking development on REC, using a pioneering ‘bootstrap Autoregressive Distributed Lag (ARDL)’ testing approach.
The research highlights a critical imperative for global climate-related policies, advocating for the adoption of renewable energy technologies and energy efficiency measures to curb over 90% of energy-related CO2 emissions. Specifically focusing on South Africa, the study’s empirical analyses employing the novel ARDL methodology reveal compelling insights.
The findings underscore the positive effects of FDI and economic growth on renewable energy consumption in South Africa. Additionally, the study elucidates the constructive role of banking sector development, indicating its affirmative long-term impact on REC. These revelations underscore the significance of linking economic and banking development with renewable energy infrastructure investments.
Policymakers are urged to intensify efforts towards integrating economic growth and banking sector advancements with renewable energy initiatives. Aligning financial policies to support clean energy investments, such as offering low-interest rates for green projects, is proposed. Such measures are poised not only to bolster the economy but also to mitigate greenhouse gas emissions, particularly carbon dioxide.
Moreover, the research emphasizes the need for strategic policies to augment the share of renewable energy in the overall energy consumption, advocating for the implementation of energy tax laws and incentivizing both investors and citizens to adopt clean energy sources. Removing barriers to green trade and investment is paramount to promote sustainable development.
The study accentuates the urgency for policymakers in South Africa to diversify the energy matrix, fostering investment and utilization of green energy sources for sustainable development. By leveraging financial development and encouraging green energy consumption, South Africa can stride towards a more sustainable, low-carbon future in alignment with global environmental objectives.
For further details, access the original paper from the publisher’s link:
https://onlinelibrary.wiley.com/doi/full/10.1111/opec.12289
