Green Energy Dynamics: Exploring the Nexus Between Renewable Energy Utilization and Environmental Quality in the Middle East and North Africa

Abstract

This empirical study addresses environmental sustainability and clean energy transitions in the Middle East and North Africa (MENA). By analyzing panel data from 2000 to 2020, this study explores the linear and nonlinear connections between renewable energy usage and environmental quality in MENA, using the pooled mean group for short- and long-term relationships, reinforced by the mean group and dynamic common correlated effect mean group models for robustness. The results show a substantial negative relationship between renewable energy utilization and CO₂ output, highlighting renewables' potential for enhancing environmental quality. Nonlinearly, beyond a threshold, incremental renewable energy gains yield diminishing CO₂ reductions, indicating a monotonical reducing pattern. This finding demonstrates a nonlinear relationship between the use of renewable energy sources and CO₂ outflows. Economic growth has a significant long-term negative effect on environmental sustainability and varying short-term effects, while energy intensity has a negative relationship with CO₂ emissions. Foreign investment’s dual dynamics in linear and nonlinear models indicate complexities surrounding its ecological footprint. The robustness tests validate results, reinforcing policy implications. Causality tests highlight bidirectional influences between renewable energy consumption, energy intensity, and environmental quality, and unidirectional links between economic growth, foreign investment, and environmental quality underscoring a multifaceted connection. These empirical results inform effective policies and strategies. MENA countries can leverage findings to expedite sustainable energy transitions, mitigate environmental degradation, and contribute to global climate change efforts.