The causal nexus between energy use, carbon dioxide emissions, and macroeconomic variables in Ghana

ABSTRACT

The study examined the causal nexus between energy use, carbon dioxide emissions, and macroeconomic variables in Ghana with data spanning from 1960 to 2013 using the vector error correction model (VECM). It is evidential from the study that almost 12% of future fluctuations in energy use are due to shocks in financial development and 10% of future fluctuations in carbon dioxide emissions are due to shocks in energy use. There was evidence of a bidirectional causality between: energy use and financial development, energy use and industrialization, and energy use and population. Energy use in Ghana is predicted to decrease from 397 kg of oil equivalent per capita in 2013 to 374 kg of oil equivalent per capita in 2040. Energy policies that aim at increasing the share of renewable and clean energy technologies into Ghana’s energy portfolio will help mitigate climate change and its impacts.

KEYWORDS:

• Carbon dioxide emissions
• Ghana
• Granger-causality
• energy economics
• econometrics