Residential Electricity Consumption and Economic Growth in Algeria
Table 6. Granger causality test. Dependant Variable
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- 5. Discussion
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Table 6.
Granger causality test. Dependant Variable Short Run Analysis Long Run Analysis Delec Dimp Dp Dy ECM t−1 Delec
- 11.89 *** 7.53 ** 7.75 **
0.037 *** Dimp
2.29 - 2.30 3.47 0.027
Dp 1.31
1.35 - 2.34 0.016 Dy 2.04 15.35 *** 2.30
- 0.001
Note: The values in the table are obtained from the Wald test based on the chi-square distribution. *** and ** denote statistical significance at the 1% and 5%, respectively. 5. Discussion Algeria is a country affected by desertification and is especially vulnerable to the effects of climate change. Traditionally, it has been a low GHG-emitting country, but with a notably increasing energy consumption in recent years, especially in the residential sector electricity consumption. Energy and electricity production is based essentially on natural gas, this country being included in the top ten natural gas producers in the world [ 4 ]. Nevertheless, it is worth noting that the declining natural gas production is an incontrovertible trend [ 82 ]. Therefore, on the one hand, the main source of energy production is declining and, on the other, a rapidly growing domestic gas demand has become a major issue. The energy measures included in the Algerian INDC are aimed at reducing the global consumption of energy by 9% by 2030 and at diversifying the energy mix by reaching 27% of electricity being generated from renewable energy sources [ 3 ].
energy consumption. The results of this study show that the relationships between electricity use and GDP (in per capita terms) present an inverted N-shape, with the second turning point having been reached Therefore, promoting growth in Algeria could be convenient in order to reduce the electricity consumption, as higher income levels may be allowing the purchase and use of more efficient appliances. McNeil and Letschert [ 83 ] state that much of the growth in electricity consumption in the developing world comes from the uptake of refrigerators and washing machines. Nevertheless, when the market is saturated because the whole population owns these appliances, there is greater potential for electricity reduction from maximizing the efficiency of these large products. In that sense, higher income facilitates purchasing energy efficient appliances, as it depends on financial capacity. Nevertheless, two main questions may be taken into consideration. Firstly, the results are supported for the per capita electricity consumption. However, the population growth in Algeria is remarkable throughout the studied period, with the annual average being 3.8%, and is still notable in recent years, with a yearly growth rate in 2016 equal to 1.79% [ 64 ]. Therefore, reductions in per capita terms may be mitigated, or at least reduced, when considered in absolute terms. Secondly, the results also show that the time trend variable is significant and positive, showing that the electricity consumption in per capita terms grows over time due to other factors not considered in the estimate. In that regard, urbanization and lifestyle changes may be included among these factors, as commented before. These effects seems to be especially relevant, as despite the negative effect of income growth on electricity consumption in households, the growth in electricity consumption has continued to take place in Algeria. That is to say, the increase in income has not been sufficient to compensate for the effect that other factors have had on the growth of residential electricity consumption, such as urbanization or the change of lifestyle.
Energies 2018, 11, 1656 13 of 18
Therefore, Algeria has to implement some electricity policy measures, if it wants to comply with its INDC commitments. On the one hand, renewable energies may be adequate to increase the electricity production to cover the increasing residential demand with low emissions. In this regard, Algeria has one of the largest solar resources in the world (exceeding 5 billion GWh/yr) [ 84 ] and
a notable geothermal reservoir in the Albian aquifer (over 700,000 km 2 ) [ 3 ]. In order to increase its renewable energy production, the Algerian Government set the Renewable Energy and Energy Efficiency Development Plan 2011–2030, the Renewable Energy and Energy Efficiency Development Plan 2015–2030 and implemented some financial measures such as the feed-in tariff scheme for solar PV installations, the renewable energy fund for investments and the national fund for energy management [ 4 ]. Nevertheless, the electricity production from solar or wind energy is very low. According to the last energy balance, the electricity production from solar and wind energy was only 8 Ktep in 2015, while total production was 16,425 Ktep [ 85 ]. Thus, the policy measures established until now may not be considered sufficient to promote the use of renewable energies. Algeria needs to implement more incentive schemes and better coordinated public support programs and public-private partnerships in order to develop local industries [ 82 ]. For example, Sellami et al. [ 86 ] state that Algeria has an enormous potential market for the solar water heater, but its development and commercialization remain in their infancy, due to the lack of specific incentive laws and the absence of a local specialized industry. Along this line, Pitelis and Teece [ 87 ] consider that local markets may be co-created by joint multinational foreign investment and home/host/international policies, which imply interactions between business and governmental efforts [ 88 ].
oil price is recently having negative impacts on the economy, government budget and external finances, as the oil and gas sector accounts for more than 95% of export revenue [ 89 ]. Therefore, the promotion of renewable energy may be conditioned by international aid and foreign investment. In this regard, some barriers may hinder new foreign investments. Among them, the Santander Bank [ 90 ] considers that bureaucracy, corruption, legal insecurity and a weak financial sector are investment barriers. In fact, according to the Doing Business 2016 Report [ 91 ] Algeria is ranked 156 out of 190. Therefore, it is considered necessary to improve the conditions that favor foreign investment. On the other hand, the Algerian Government may control the rapid growth in electricity consumption by adjusting electricity tariffs to rationalize its consumption. As stated in Aissaoui [ 82 ], progressively raising prices becomes necessary in order to adjust them to electricity production costs. The results show that price is currently not significant in reducing electricity consumption, which could be related to its low level, as they are still being highly subsidized. Nevertheless, raising residential electricity prices may be done slowly and incrementally, as Algeria may be considered a politically sensitive area. As stated in Bouznit and Pablo-Romero [ 1 ], it is indispensable to undertake compensatory schemes, such as protecting low income households. Yüklə 0,82 Mb. Dostları ilə paylaş:
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