The Synergistic Effect of Institutional Quality and Remittances on Africa's Low-Carbon Transition

Introduction

The unsustainable escalation in energy consumption and the depletion of natural resources have exacerbated the environmental challenges resulting from human activities. The increasing threat of global warming poses a severe danger to human existence, evident in the form of rising temperatures, heightened sea levels, prolonged drought periods, and the degradation of ecosystems (Burke et al., 2018). Traditional energy sources, notably the combustion of fossil fuels like oil and coal, have consistently been identified as major contributors to environmental deterioration (Yakubu et al., 2022). Fossil fuels hold a significant share of global primary energy consumption, accounting for approximately 80% of the world's energy supply (Environmental and Energy Study Institute, 2021). However, recognizing the adverse impacts of these conventional energy sources, global treaties and agreements such as the Kyoto Protocol, the United Nations Framework Convention on Climate Change, and the Paris Agreement have underscored the critical importance of environmental sustainability. These international agreements stress the need for implementing measures that aim to mitigate and decrease human-generated greenhouse gas (GHG) emissions in the atmosphere. In this regard, the adoption of renewable energy has the potential to serve as a significant driver in enhancing the overall state of the environment.

Over the years, governments have endeavoured to implement policy frameworks that facilitate the expansion of renewable energy usage and diversification of the energy portfolio in response to the challenges posed by global climate change (Bkun & Alola, 2022). The transition to a low-carbon economy is more pertinent for Africa due to its vulnerability to the adverse consequences of climate change. The Word Bank (2020) reported that despite the continent's lowest contribution to global greenhouse gas emissions, it is among the regions most affected by climate change. Among others, the extreme poverty level and the dependency on rain-fed agriculture exacerbate its susceptibility to climate change.

Acknowledging the pressing need to tackle climate change, African governments, within the framework of the Paris Agreement, have pledged to shift towards low-carbon economies. This commitment entails implementing climate change adaptation strategies and adopting renewable energy sources (United Nations, 2015).

Harnessing renewable energy sources can be crucial in mitigating climate change (Zhao et al., 2023), but it necessitates substantial upfront investments in infrastructure and technology. In the context of Africa, this presents a unique challenge. However, a potential solution lies in utilizing remittances as a viable funding option for facilitating the continent's sustainable energy transition. Remittances, which involve financial transfers from migrants to their home nations, offer a promising avenue for supporting renewable energy projects in Africa (Das et al., 2021). However, for remittances to have a profound and enduring impact on the energy transition agenda, it becomes imperative to consider the quality of institutional structures in the recipient nations. Institutions can be pivotal in determining a country's ability to attract and effectively employ remittances for sustainable development, particularly within the energy sector (Moskalenko et al., 2022). Effective governance, for instance, assumes a critical role in establishing an enabling environment for investments in renewable energy and ensuring the efficient implementation of energy policies (Vakulchuk et al., 2023).