However, despite growing adoption of environmental taxes worldwide, their efficacy in reducing carbon dioxide emissions (CO2E) in African contexts remains underexplored, and existing forecasting models have ignored tax policies, rendering their forecasting and mitigation output ineffective for policy making.
Thus, motivated by these gaps, this study examined the impact of environmental taxes on CO2E for 14 African countries while accounting for renewable energy consumption (REC), economic growth (EG), trade openness (TO), and population size (POP). Additionally, the study forecasted and proposed the CO2E mitigation pathways for the studied countries. Utilizing the panel autoregressive distributed lag model, the study found that environmental taxes reduce CO2E in Africa in the long run, while POP and EG increase CO2E.
The results also showed that REC significantly reduces CO2E in the short run. Additionally, using the long-short-term memory algorithm, we found that CO2E in Africa has an increasing trend, with South Africa, Morocco, Tunisia, Ghana, and Cote D’Ivoire expected to emit the highest CO2E by 2030, while Burkina Faso, Mali, Togo, Niger, and Rwanda will emit the least CO2E. The study suggested that African policymakers leverage environmental taxes and boost renewable energy (RE) generation to attain a cleaner environment.
Climate change, which is mainly caused by the surge in global carbon dioxide emissions (CO2E), remains a formidable obstacle to both human and economic development, as highlighted by various scholars and organizations.
Failure to promptly address the upshots of climate change could result in a substantial and potentially permanent 5% global economic growth loss, escalating to 20% when considering a broader range of bearings and risks. Therefore, international organizations and governments have increasingly prioritized and committed to fighting climate change by cutting CO2E.
However, global CO2E keeps increasing, reaching 37.04 billion tons in 2019 from 9.39 billion tons in 1960, representing a 294.5% increase. To this end, confronting the persistent surge in global CO2E requires understanding the different factors that drive the rise in CO2E, as well as forecasting and proposing effective mitigation strategies.
Recently, many scholars have probed the environmental implications of environmental taxes. Environmental taxes raise the costs associated with conventional energy sources, prompting increased demand for alternative clean energy sources. They also inspire research into renewable energy (RE) sources, promote novel technologies and production cycles, and impose constraints on emission trading by establishing limits on emission prices. However, the empirical evidence remains contradictory, with studies discovering that environmental taxes lessen CO2E, while others.
Furthermore, existing CO2E forecasting studies have ignored environmental taxes as an input parameter, thereby rendering their forecasting outputs potentially inaccurate for policy contexts where tax instruments are being deployed.
The study focuses on Africa for the following reasons. First, Africa has experienced a slightly accelerated temperature rise compared to the global average and is expected to see a 2 °C temperature increase by 2080, according to the IPCC, making it one of the areas hit hardest by climate change. This vulnerability is worsened by rising emissions, for instance, African CO2E increased by 6.34% annually, from 0.161 to 0.317 million tons. In the last two decades, Africa's CO2E grew at an average rate of 2.64%, exceeding the slowed global growth rates of 1.3% and 1.9%.
These trends underscore the urgent need for effective mitigation strategies to fight climate change in Africa. Also, recent African climate policy developments underscore the need for rigorous empirical analysis. The African Union's Agenda 2063 explicitly prioritizes environmentally sustainable and climate-resilient economies as a core aspiration for continental development. National initiatives exemplifying this commitment include South Africa's Carbon Tax Act, implemented in June 2019.
Despite these policy advancements, empirical evidence evaluating their effectiveness remains limited, thereby constraining evidence-based policy refinement. Besides, African economies exhibit heavy dependence on climate-sensitive agriculture, limited fiscal capacity for environmental policies, nascent industrialization creating carbon lock-in risks, and concurrent poverty reduction imperatives that complicate emissions mitigation, requiring region-specific analysis distinct from developed or other developing regions.
These distinctive features imply that findings from other regions cannot be directly extrapolated to Africa, thereby warranting context-specific examination of environmental tax effectiveness and emissions trajectories. Furthermore, several African governments have implemented regulations, including establishing an environmental protection tax and emissions trading system. For instance, Ghana recently introduced a vehicle emissions levy to reduce CO2E.
A Guest Editorial