The conditioning role of institutions in the nonrenewable and renewable energy, trade openness, and sustainable environment nexuses: a roadmap towards sustainable development

The unflinching upsurge in global warming has put the world into a state of disarray, and policymakers are not sure of what the future holds for the ecosystem. To get the global environment back on track of sustainability, efforts are relentlessly emanating from both developed and developing economies to identify the hindering and enhancing factors. Given the preceding narratives, this paper investigates the tripartite impacts of renewable and nonrenewable energy, trade openness, and institutions on sustainable environment in 54 African countries from 1996 to 2019. The study employs the two-step system generalized methods of moment (SYS-GMM) in estimating the effects of the regressors on four indicators of sustainable environment. Six findings are prominent from the study. First, nonrenewable energy (NRE) and trade openness (TO) hinder sustainable environment, while renewable energy enhances it. Second, the unconditional impacts of institutions drive the path to a sustainable environment. Third, the interaction of institutions with NRE and TO hinders sustainable environment. However, after conducting institutional enhancement estimations, the interactive terms became supportive of sustainable environment. Fourth, the thresholds are policy-relevant across the specifications. Specifically, a 31.11% utilization of nonrenewable energy and 43.75% openness to trade contribute to a sustainable environment. Sixth, the impacts of economic growth and its square empirically support the inverted U-shaped EKC. This study suggests the adoption of carbon-taxing on nonrenewable energy products, price-subsidization for renewable energy goods and services, and institutional quality reforms as pathways towards achieving a sustainable environment in Africa.

Automated summary

The escalating global warming has caused chaos in the world, and policymakers are uncertain about the future of the ecosystem. Efforts are being made by both developed and developing economies to identify the factors that hinder or enhance a sustainable environment. This study investigates the impact of renewable and nonrenewable energy, trade openness, and institutions on sustainable environment in 54 African countries from 1996 to 2019. The study reveals six key findings, including the hindering effect of nonrenewable energy and trade openness, and the enhancing effect of renewable energy on sustainable environment. It also suggests the adoption of carbon-taxing, price-subsidization for renewable energy, and institutional quality reforms to achieve a sustainable environment in Africa.