ASSESSING THE CONTRIBUTION OF GREEN INVESTMENT TO INDUSTRIAL DECARBONIZATION IN SUB-SAHARAN AFRICA: THE RENEWABLE ENERGY PERSPECTIVE

The largely untapped question of whether green investment can decarbonize industries in sub-Saharan Africa is the driving force behind this study, considering the region is increasingly emitting carbon emissions and is in dire need of development. The paper will analyze how green investment will affect the carbon emission of industries in 42 sub-Saharan African countries between the year 2001 and 2024. The results of the study using pooled mean group estimation, two-stage least squares, fully modified ordinary least squares, heterogeneous Driscoll-Kraay estimations, and Dumitrescu-Hurlin panel causality tests, all show that green investment, proxied by renewable energy investment, has a significant negative impact on industrial carbon emissions at the aggregate level. Green investment and emissions have a bidirectional causality, which is partially counterbalanced by carbon-intensive access to electricity. It is also important to note that green investment has counterintuitive emissions-increasing impacts in low-income countries, highlighting the significance of income-differentiated policy frameworks. Before ramping up investment programmes in lower-income economies, policymakers should prioritize the absorptive capacity building, through technology transfer, green industrial policy and workforce development. The growth of energy infrastructure should be based on clean energy transitions, and the regional coordination mechanisms should be used to harmonize the green finance standards. The institutional reform should be seen as a co-investment with climate finance in order to maximize decarbonization multipliers across income groups.