Carbon Emissions, Energy Consumption, and Economic Growth in Nigeria

Abstract

Nigeria, Africa’s largest oil producer, faces significant environmental and economic challenges due to its reliance on fossil fuels, contributing 0.74% of global CO2 emissions in 2019 (354 MtCO2e), with the energy sector accounting for 60.5% of emissions. The analysis, grounded in the Environmental Kuznets Curve (EKC) and resource curse hypotheses, examines how CO2 emissions and energy consumption impact economic growth, proxied by real GDP (RGDP), alongside control variables: population growth rate (PGR), urbanization (URB), and energy prices (EP). This study investigates the dynamic relationships among carbon dioxide (CO2) emissions, energy consumption, and economic growth in Nigeria from 1970 to 2024, employing the Autoregressive Distributed Lag (ARDL) bounds testing approach and Toda-Yamamoto Granger causality tests. Findings reveal a long-run negative effect of CO2 emissions and energy consumption on economic growth, with coefficients of -80.594 and -7.374, respectively, significant at 5% and 1% levels, driven by environmental degradation and inefficiencies in energy use. In the short run, both variables positively influence growth, aligning with the EKC’s early phase. A unidirectional causality from CO2 emissions to economic growth is observed, supporting the EKC’s pollution-intensive growth path, while no causal link exists between energy consumption and growth, consistent with the neutrality hypothesis. The study highlights Nigeria’s climate vulnerability, including the 2022 floods, and its energy poverty (60–70% lack electricity access). Policy recommendations include deep decarbonization through renewable energy integration, carbon pricing, and energy efficiency standards to balance economic growth with sustainability, contributing to Sustainable Development Goals (SDGs) 7, 8, and 13. These findings bridge empirical gaps in Nigeria-specific literature, offering actionable insights for achieving the country’s net-zero target by 2060.