Researchers from the Faculty of Economics and Administrative Sciences at Near East University collaborated on a study aimed at accelerating South Africa’s energy transition to align with the 2030 Sustainable Development Goals (SDGs). The research assessed the impact of oil prices, fiscal policy, and foreign direct investment (FDI) on renewable energy consumption in South Africa from 1979 to 2019, utilizing the innovative Augmented Autoregressive Distributed Lag approach.
The study’s findings underscore crucial determinants influencing renewable energy consumption in South Africa. Economic growth and taxation revenues emerged as positive drivers for promoting renewable energy usage, fostering ecological sustainability and reducing dependency on foreign energy suppliers. Contrarily, an increase in oil prices exhibited a detrimental effect on renewable energy consumption, emphasizing the need for strategies to mitigate this impact. Surprisingly, the research did not find a positive correlation between foreign direct investment and renewable energy.
Based on these outcomes, a comprehensive policy framework has been proposed to guide South Africa towards achieving sustainable energy objectives and meeting the SDGs.
The suggested policy interventions encompass various crucial aspects:
Adoption of Green Policies: South Africa’s government must incentivize investments in green energy, encouraging the adoption of eco-friendly technologies. Allocating a substantial portion of the budget for research and development projects will bolster the country’s quest for sustainable development while reducing reliance on foreign energy sources.
Mitigating Oil Price Effects: Policymakers need to design strategies to counter the adverse effects of oil price fluctuations on renewable energy development, ensuring sustained progress in the renewable energy sector.
Fiscal Measures for Green Energy Promotion: Leveraging fiscal policy, the government should impose taxes on non-clean energy sources while lowering tax rates on green energy alternatives. Financial incentives such as reduced tax rates on green production and investment will significantly contribute to environmental sustainability.
Encouraging Green Investment: Removing restrictions on green foreign investment and implementing policies to attract local and foreign investment in green energy ventures are pivotal for advancing ecological sustainability and promoting renewable energy consumption.
Supporting SDG 7: It is imperative for South Africa to prioritize supporting renewable energy to align with SDG 7, aimed at promoting clean and reliable energy sources, thereby integrating and increasing renewables in the energy mix.
For further details, access the original paper from the publisher’s link:
https://www.mdpi.com/2071-1050/15/12/9500
