Does Greenhouses Gases Emissions Reduction Harms Economic Growth? A Lesson from Togolese Economy

Abstract

The move towards lower greenhouses gases (GHGs) emissions as a solution to mitigate climate change is not costless. Focusing on Togolese economy, we assessed in this article the role played by the shift to renewable energy consumption path in the search for higher economic growth. Based on the Auto-Regressive Distributed Lagged (ARDL) model and with the help of time series data that cover the period 1983-2012, our estimates indicate that the effects of higher renewable energy consumption on per capita economic growth varies depending on time horizon. A 1% increase of renewable energy consumption reduces per capita economic growth by 2.33% in the short run while it boosts economic growth by 1.22% in the long run. These findings are partly explained by the high technological rigidity of the country. The message to be sold to policy makers is that switching from fossil energy technology to technology based on renewable energy is an expensive and time consuming process which is economically efficient only in the long run. Consequently, the country might need relatively considerable time to fully shift to a cleaner path in terms of carbon emissions mitigation. Thus, the country move towards lower GHGs emissions must be tactically managed and done progressively.