Determinants of carbon dioxide emissions: role of renewable energy consumption, economic growth, urbanization and governance

Jacob Otim (), Susan Watundu, John Mutenyo and Vincent Bagire
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Jacob Otim: Kyambogo University
Susan Watundu: Makerere University Business School
John Mutenyo: Makerere University
Vincent Bagire: Makerere University Business School

SN Business & Economics, 2025, vol. 5, issue 3, 1-23

Abstract: Abstract CO2 emissions continue to raise development and scholarly concerns yet the factors influencing these emissions remain inadequately and variedly addressed. Using a panel of East African Community (EAC) countries, we revisit and test the drivers of CO2 emissions, and the causal relationship between governance, renewable energy consumption, economic growth, urbanization, and CO2 emissions. Framed on the STIRPAT model, results show that the inverted U-shaped environmental Kuznets hypothesis is valid for all the EAC countries. Findings from long-run CO2 emissions elasticity of urbanization is robust and indicates that urbanization has a significant positive impact on the environmental degradation of approximately 85% of the countries studied. Conversely, the consumption of renewable energy and the presence of good governance both contribute to a reduction in CO2 emissions, thereby enhancing environmental quality. Besides, economic growth and governance Granger cause CO2 emissions. Our assessment infers that investing in renewable energies and promoting good governance are crucial for reducing emissions. Additionally, the study provides important policy recommendations that can help East African Community countries achieve the Sustainable Development Goals.

Keywords: Causality; Cointegration; Panel data analysis; FMOLS; Carbon dioxide emissions; STIRPAT model (search for similar items in EconPapers)
JEL-codes: O44 Q54 R11 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s43546-025-00791-1

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