Epsilon Open Archive

Abstract

This thesis contains five empirical papers that contribute to the energy demand management literature on Africa. It investigates the following policy issues – business cycle and energy conservation, government fuel subsidies and energy efficiency, economic growth and environmental quality, structural effects in parameters, the transition between energy efficiency and energy inefficiency, forecast of energy demand, shifts in demand behaviour, and the persistence profile of energy demand to shocks – using data from five countries: Algeria, Nigeria, South Africa, Cameroon and Ghana.

In terms of contribution, this thesis provides the first empirical attempt to investigate the transition between energy efficiency and energy inefficiency; provides a comprehensive analysis of road transport energy demand and the implications of structural breaks for model parameters; provides evidence to support the fact that economic growth and environmental quality are jointly achievable, and argues that there is an income state that drives investment in energy efficiency.

The main results of the thesis are as follows. First, low income state does not promote investment in energy efficiency. Second, reducing or withdrawing government fuel subsidies will enhance energy efficiency. Third, investment in technology in the industrial sector is a likely panacea to integrate the goals of economic growth and environmental quality. Fourth, the existence of structural breaks in the data significantly changes how price of crude oil, FDI, economic structure and trade openness promote energy efficiency. Fifth, the characteristics of industries and technology absorptive capacity of countries significantly facilitate energy savings in FDI. Sixth, the duration of an energy inefficient state is about twice as long as an energy efficient state, mainly due to fuel subsidies, low income, high corruption, regulatory inefficiencies, poorly developed infrastructure and undeveloped markets. Finally, diesel and gasoline fuels differ in many respects which suggest that a discriminatory tax policy would be an appropriate tax policy than a uniform tax policy.