Economic Growth and Carbon Emissions: A Comparative Study between Kenya and South Africa

This study is a comparative analysis of Kenya and South Africa, the largest economies in Eastern and Southern Africa respectively, based on gross domestic product (GDP), energy use and carbon emissions. This study investigates the contribution of economic growth and renewable energy use on greenhouse carbon dioxide emissions in both country-level and group data, to observe their possible impact on environmental pollution. The present study addresses United Nations Sustainable Development Goal 13, to combat climate change and its impacts. To this end, this study is conducted in Kenya and South Africa using secondary data for the period 1990-2022. As an econometric strategy, we adopt the use of both panel and time series over the highlighted countries. The study employed an ARDL and PMG panel estimation approach to analyze the long-run relationship while Granger causality was conducted to confirm the short-run relationship between study variables. The empirical results show that economic growth and energy use significantly increase carbon emissions in South Africa, Kenya and aggregate data. Moreover, changes in industrial structure and urbanization have a mixed influence on carbon emissions in all models. Furthermore, short-run causality results point to a unidirectional relationship running from economic growth to carbon emissions in Kenya. In contrast, for South Africa, causality runs from carbon emissions to growth. In addition, for panel analysis, the study confirmed a bidirectional relationship. In conclusion, this comparative case study shows that countries with substantial growth in GDP and intensive energy use have high carbon emissions. Given these, the positive relationship poses a dilemma for Kenya and South Africa in their drive to achieve growth and at the same time manage environmental pollution. The empirical findings of this study imply that these countries should take all possible policy actions such as the massive investment and deployment of renewable energy, shifting gradually from non-renewable energy sources to renewable sources, a range of renewable energy sources, especially those that don’t generate greenhouse gases, are needed, the use of climate finance to transition to clean energy, carbon tax policy and trading schemes to curtail growth in carbon emissions and environmental degradation.