Evidence brief: Do China’s low-carbon technology products and environmental goods trade mitigate energy-related carbon emissions in Africa?

Abstract

Motivated by the rise in green trade between China and Africa and the growing environmental pressures associated with energy-related emissions in Africa, this study examines the impacts of low-carbon technology (LT) products and environmental goods (EGs) imported from China on the energy-related carbon emissions intensity (CEI) of 42 African countries for the period 2003–2023. To account for endogeneity issues and distributional differences, the study employs instrumental variables and panel quantile techniques. The findings reveal several important points. First, LT products and EGs imported from China significantly reduce the energy-related CEI of African countries. Second, the influence of imports of LT products and EGs on energy-related CEI varies by income level: they increase energy-related CEI in low-income African economies but decrease it in middle-income African nations. Third, the import of LT products and EGs has a stronger energy-related CEI-reducing effect in African countries with better institutional frameworks. These findings contribute to the current literature by offering a detailed and nuanced understanding of how trade in LT products and EGs can help reduce energy-related carbon emissions. Policy recommendations are presented based on these findings.

1. Introduction

Climate change stands as one of the most pressing challenges facing societies worldwide in the twenty-first century [1]. Among these emissions, carbon dioxide (CO2) produced by burning fossil fuels remains the dominant source of greenhouse gases (GHG) [1,2]. Specifically, the energy sector is the dominant global contributor to GHG emissions, accounting for about 73.2%; transportation accounts for roughly 16.2%, while energy consumption in buildings accounts for around 17.5% [3]. Hence, international climate initiatives have centered on reducing energy-related CO2 emissions, recognizing their significant influence on global emission patterns [1].

The trend of CO2 emissions in Africa has been rising over the years [4], and the continent’s warming rate exceeds the global average, making it the warmest worldwide. Specifically, Africa’s high temperatures are expected to surpass current levels by 2°C in 2050, with an estimated GDP loss of around 12% [5]. To prevent these damaging impacts, emissions growth must decline sharply, and the rate of warming must be limited to 1.5 °C. In Africa, the majority of CO2 emissions in the energy sector originate from burning fossil fuels such as coal, oil, and natural gas for power generation or to fuel vehicles and machinery [6]. Also, over 75% of Africa’s electricity is generated from fossil fuels, posing a significant threat to the continent’s sustainable development [7]. Therefore, taking measures to reduce energy-related carbon dioxide emissions intensity (CEI) can significantly contribute to achieving emissions reduction targets. However, the main question is finding the key mechanisms for mitigating energy-related CEI in Africa.