Green Finance, 2019, 1(4): 387-404. doi: 10.3934/GF.2019.4.387

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Determinants of electricity consumption and energy intensity in South Africa

1 School of Business and Economics, Presbyterian University College Ghana, Abetifi-Kwahu, Ghana
2 Graduate School of Economics, Kobe University, Japan

This study investigates the drivers of electricity consumption and energy intensity in South Africa. Relying on annual time series data from 1975–2014, the study examines the effect of income, manufacturing, changing characteristics of manufacturing sector, manufactures trade, domestic credit and urbanization on energy situation in the country. Estimation from the fully modified ordinary least squares method reveals income reduces electricity consumption and energy intensity; urbanization increases electricity consumption; and manufacturing increases electricity consumption and intensity. Domestic credit is found not to exhibit any statistically significant effect on the energy situation in the country. A further analysis to ascertain the effect of these variables on the energy situation in South Africa is done using the variance decomposition analysis. The results among other things imply the need for policymakers to subsidize energy efficient technologies for manufacturing firms and to also improve the rural settlements in South Africa.
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