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Fuel subsidies and Carbon Emission: Evidence from asymmetric modelling

Author

Listed:
  • Ibrahim A. Adekunle

    (Olabisi Onabanjo University, Ago-Iwoye, Nigeria)

  • Isiaq O. Oseni

    (Olabisi Onabanjo University, Ago-Iwoye, Nigeria)

Abstract

It is expected that fuel subsidy removal should hinder carbon emissions growth through low energy consumption channels amid higher energy prices. However, outliers in this theoretical disposition make empirical proof of the fuel subsidy-carbon intensity apt and primitive. Despite established fuel subsidy abolishment gains for climate and economic welfare, the relevance, magnitude and policy implications remain dimly. This paper employs the non-linear autoregressive distributed lag (NARDL) estimation procedure to gauge the contemporaneous influence of fuel subsidy for carbon intensity in Nigeria. Findings revealed that fuel subsidy removal inversely relates to Nigeria's carbon emission in the short-run and long run. The study recommends complementary policy option that ensures additional financial savings to the government should be invested in public sector growth that can cushion the effect of relative income loss to the citizenry. The Nigerian government should ensure measures are kept in place to discourage over-consumption of alternative energy (for example, coal) that could also threaten the green economy paradox.

Suggested Citation

  • Ibrahim A. Adekunle & Isiaq O. Oseni, 2021. "Fuel subsidies and Carbon Emission: Evidence from asymmetric modelling," Working Papers 21/001, European Xtramile Centre of African Studies (EXCAS).
    • Handle: RePEc:exs:wpaper:21/001
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    References listed on IDEAS

    as
    1. Hoang, Thi Hong Van & Lahiani, Amine & Heller, David, 2016. "Is gold a hedge against inflation? New evidence from a nonlinear ARDL approach," Economic Modelling, Elsevier, vol. 54(C), pages 54-66.
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    4. M. N. Hasan & R. W. Koenker, 1997. "Robust Rank Tests of the Unit Root Hypothesis," Econometrica, Econometric Society, vol. 65(1), pages 133-162, January.
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    Cited by:

    1. Zheng Liu & Wenzhuo Sun, 2023. "Study on Low-Carbon Technology Investment Strategies for High Energy-Consuming Enterprises under the Health Co-Benefits of Carbon Emission Reduction," Sustainability, MDPI, vol. 15(11), pages 1-22, May.
    2. Kelly Bruin & Aykut Mert Yakut, 2023. "The Impacts of Removing Fossil Fuel Subsidies and Increasing Carbon Taxation in Ireland," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 85(3), pages 741-782, August.

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    More about this item

    Keywords

    Fuel Subsidy; Carbon Emission; Non-linear ARDL; Nigeria;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • N57 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - Africa; Oceania
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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