A roadmap to a green economy in South Africa: modelling technological innovation and energy consumption in the novel dynamic ARDL simulations framework

Abstract

AbstractSouth Africa’s heavy reliance on fossil fuels has posed significant challenges to environmental sustainability, primarily due to the associated climate change concerns. To combat these issues, the South African government has turned to technological innovation. However, research examining the combined impact of technology and energy use on environmental quality in the country remains scarce. This study aims to fill this gap by utilizing a novel dynamic autoregressive distributed lag (DARDL) simulation framework to analyze the influence of various factors on CO2 emissions from 1960 to 2020. Key findings include that technological innovation contributes to CO2 emission reduction over both short and long terms. The "scale effect" exacerbates emissions, while the "technique effect" mitigates them, aligning with the environmental Kuznets curve (EKC) hypothesis. Additionally, energy consumption, foreign direct investment, and industrial value-added have adverse impacts on environmental quality. Surprisingly, increased trade openness, despite short-term benefits, proves detrimental to the environment over the long term, supporting the pollution haven hypothesis (PHH). In light of these findings, the study emphasizes the vital role of technological innovation in achieving energy security and ecological integrity. South Africa’s government and policymakers should consider this as a clean technology source to address climate change and bolster environmental sustainability.

Keywords

• Trade openness
• CO2 emissions
• dynamic ARDL simulations
• energy consumption
• EKC
• cointegration