The Effect of Socio-Economic and Energy-Related Factors on Environmental Degradation in South Africa: An Autoregressive Distributed Lag Model Approach

Over the past two decades, the world has experienced a significant and relentless increase in environmental degradation, measured through carbon emissions (CO2). These emissions have been one of the persistent global concerns. South Africa boosts abundance of natural resources and some of the world’s most substantial mineral deposits, endowments in the form of precious metals, diamonds and gold. The paper aims to examine the impact of socio-economic and energy-related factors on environmental degradation from a South African perspective. Using multivariate annual data spanning from 1991 to 2022, the Autoregressive Distributed Lag Model (ARDL) was employed to determine both short-run and long-run impact of financial development (FD), renewable energy (RE), non-renewable energy (NRE), unemployment rate (UNE), economic growth (GDPPC), and population growth (PoPG) on CO2 emission. The results show that NRE remains a dominant driver for environmental degradation, while RE is positively associated with emissions under current system conditions. FD exhibits short-run emission-intensity but long-run mitigation effects. The results suggest a need for relevant policymakers to prioritize coal displacement, stimulate economic growth and promote access to green financing, and related technologies and consumption, to enhance and promote environmental quality in South Africa. The conclusion is that South Africa’s energy-economy nexus is still at a transitional stage, where targeted policy intervention and structural reform are essential to accelerate the shift towards a low-emission economy. Future research can extend the analytical depth by exploring asymmetries, disaggregating fossil fuels, and incorporating broader environmental indicators.