Energy transition in Africa: The role of human capital, financial development, economic development, and carbon emissions

The current energy structure of most economies must be upgraded to a renewable energy source (RES) to help mitigate ecological dilapidation and achieve sustainable development goals. The transition to RES has recently received attention from energy experts, international bodies and environmental scientists. However, there is contrasting evidence on what factors affect the evolution and deployment of RES, especially from the perspective of emerging African economies. Hence, the current analysis sought to explore the influence of economic development (ECD), carbon emission (CEM), human capital (HUC), financial development (FID), and the country’s risk factors, such as political risk (POR) and institutional quality (INQ) on the development of RES. The research employed a panel dataset from 1990 to 2020 and used the newest estimation approach of Cross-Sectional Augmented autoregressive Distributed Lag (CS-ARDL) to establish the long-run connection among the variables. The study confirmed the prevalence of the “energy-led ECD hypothesis”. In addition, the empirical findings indicated that RES deployment could be facilitated through ECD, CEM, FID and HUC. Moreover, the country’s risk factors, which include POR and INQ, had an inverse connection with the deployment of RES. Lastly, there is a unidirectional causality between CEM, FID, HUC, INQ and RES, while a directional causality exists between ECD, POR and RES. The paper highlights a variety of policy angles to help with the expansion of RES in emerging regions.