The Impact of Oil Price Volatility on Renewable Energy Consumption in Oil-Dependent Sub-Saharan African Countries. A Panel Bayesian VAR Approach

Abstract :

Renewable energy has gained prominence in recent times as a way to minimize oil dependence. The use of renewable energy can hedge against the negative influence of oil price volatility on an economy and also combat climate change. Therefore, this study aims to assess the impact of oil price volatility on renewable energy consumption in Sub-Saharan African countries using a Bayesian Panel VAR approach. The study concentrates on a group of net oil-exporters and net oil-importers in Sub-Saharan Africa. Findings show that for oil exporters, oil price volatility has a positive impact on renewable energy in the short run and in the long run while in net oil-importing countries a negative relationship was observed between oil price volatility and renewable energy consumption all through the periods. The study recommends the implementation of policies that creates awareness in SSA countries regarding the importance of renewable energy as a possible hedge to the negative influence of oil price volatility.