article · Applied Energy
Examining environmental quality in Ghana reveals how sustainable energy innovations and financialisation influence emissions across resource-rich sub-Saharan economies. Economic growth, financial development, and natural resource rents directly increase pollutant emissions. Conversely, green innovations reduce the rate of pollution. Combining financial development with green innovations improves overall ecological quality, demonstrating that financial flows can mitigate harm when channelled effectively. In contrast, combining financial development with natural resource exploitation escalates pollution. Causality analysis confirms that green innovations, financialisation, resource rents, and economic growth drive emissions, whilst interactions between finance and both innovation and resources show two-way relationships with pollution. Achieving net-zero targets outlined in the Paris Accord depends on expanding investments in green innovations alongside using international financial resources to enhance regional environmental sustainability.
Resource-rich African economies face the challenge of expanding their economies without exacerbating environmental degradation. Understanding how finance interacts with technology shows that financial growth alone increases emissions unless deliberate investments direct those funds into green innovations. This knowledge provides clear guidance for policymakers aiming to align national economic expansion with international net-zero commitments.
This econometric analysis operates at a macro policy level rather than proposing a specific technological product. It provides strategic evidence for policy planners, development banks, and green technology investors seeking to target financial flows toward sustainable energy technologies. As early-stage macroeconomic research, it outlines the systemic conditions required for green investment rather than delivering an immediate, deployable commercial tool.
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Following the rising importance of energy transition in the environmental sustainability discussion, it is imperative to understand the roles of sustainable energy innovations and financialization to reach informed inferences for policy formulation. We examined the environmental quality performance in Sub-Sahara Africa using the case of the resource-rich Ghanaian state vis-à-vis the possible moderating influence of green innovations and financial development. The empirical analysis encompassed various estimation issues, including structural breaks, heteroscedasticity, and normality in data structure. We simulated with the dynamic autoregressive-distributed lag technique and confirmed that financialization, resource rents, and economic growth are significant positive determinants of pollutant emissions. However, green innovations decrease the rate of pollution in the nation. Moreover, the interaction between green innovations and financial development improves ecological quality, while that between natural resources and financial development spurs pollution in the ecosystem. Furthermore, causal connections in the series indicated unidirectional causalities from green innovations, financialization, natural resource rents, and economic growth to pollutant emissions. However, the interactive terms between green innovations and financial development and between natural resource rents and financial development are bi-directionally related to ecological pollution. Hence, the study essentially suggests that the net-zero emission agenda of the Paris Accord is achievable from higher investments in green innovations while harnessing the benefits of international financial flows to boost the sustainability capacity of the Sub-Saharan Ghanian economy.
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DOI: 10.1016/j.apenergy.2024.123120
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