From Fossil Dependence on Sustainability: The Effects of Energy Transition, Green Growth, and Financial Inclusion on Environmental Degradation in the MENA Region

Sami Mustafa Omar (), Wagdi M. S. Khalifa and Tolga Oz
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Sami Mustafa Omar: Institute of Social Sciences, University of Mediterranean Karpasia, Northern Cyprus, Mersin 10, Turkey
Wagdi M. S. Khalifa: Department of Business Administration, University of Mediterranean Karpasia, Northern Cyprus, Mersin 10, Turkey
Tolga Oz: Institute of Social Sciences, University of Mediterranean Karpasia, Northern Cyprus, Mersin 10, Turkey

Energies, 2025, vol. 18, issue 14, 1-22

Abstract: Amid growing environmental concerns and an increasing push for sustainable development, countries in the Middle East and North Africa (MENA) region have taken proactive steps toward green growth, energy transition, and technological innovation. As a result, this study examines the effects of green growth, energy transition, technological innovation, financial inclusion, and urbanization on environmental sustainability in the Middle East and North Africa (MENA) region. Moreover, this study breaks new ground by exposing the hidden environmental costs of financial inclusion, urbanization, and technological innovation in the MENA region’s development trajectory, thereby providing compelling evidence for rethinking sustainability through an integrated approach that aligns economic ambition with ecological responsibility. Data for the studied variables were sourced from the World Bank database covering the period 1990 to 2021. The results show that green growth and energy transition significantly reduce CO 2 emissions, supporting the idea that economic expansion aligned with environmental priorities can contribute to ecological improvement. However, the impact of technological innovation is statistically insignificant, indicating that innovation in the region has not yet translated into meaningful environmental gains, possibly due to the dominance of non-green or industrial-focused innovation. Financial inclusion is found to increase CO 2 emissions, likely by facilitating greater access to credit and financial services that fuel energy-intensive consumption and production activities. Similarly, urbanization also contributes to rising emissions, reflecting the unsustainable nature of urban growth in many MENA region. Based on this study, we advocate for a coordinated regional approach to climate and energy policy, underpinned by shared governance and collective action.

Keywords: CO 2 emissions; environmental sustainability; MENA region; climate policy; sustainable development; green growth; energy transition; financial inclusion (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2025
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