Residential Electricity Consumption and Economic Growth in Algeria
Keywords: economic growth; residential electricity consumption; ARDL model; Algeria 1. Introduction
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Keywords:
economic growth; residential electricity consumption; ARDL model; Algeria 1. Introduction Algeria has shown great interest in signing the 2015 Paris agreement [ 1 ]. On the one hand, Algeria is the third largest CO 2 emitter among African countries [ 2 ] and, in 2014, total emissions amounted to 147 MT CO 2 . On the other hand, Algeria is especially exposed to climate change effects as the annual rainfall has been reduced in recent years by up to 30%, and its capacity to capture carbon is small due to the wide extent of the desert [ 3 ]. Therefore, Algeria was one of the first developing countries to submit its Intended Nationally Determined Contribution (INDC), in which it is committed to reducing CO 2 emissions by at least 7%, by 2030. Nonetheless, Algeria has a difficult mission ahead to comply with this target. Its total final energy consumption has increased 32% from 2010 to 2014, its major energy increases being related to electricity use in the residential sector [ 4 ]. Thus, residential energy consumption has increased 43% and the residential electricity consumption increased 50% over this period. As stated in Bouznit and Pablo-Romero [ 1 ], the main energy increases have been especially related to changes in the way of life. Furthermore, electricity consumption is estimated to increase more than double by 2030 [ 5 ]. Energies 2018, 11, 1656; doi:10.3390/en11071656 www.mdpi.com/journal/energies Energies 2018, 11, 1656 2 of 18
These energy increases have been accompanied by CO 2 emissions increases, due to the positive evolution of the consumption of non-renewable energy and the insignificant effect of renewable energy on environment improvement [ 6 ]. In this regard, the Algerian CO 2 Emissions Intensity − Power
sub-index from the Environmental Performance Index has not improved from its baseline score (referred to ten years previous to current) [ 7 ]. Thus, if the Algerian authorities want to fulfill their INDC targets while improving the wellbeing of its citizens, some energy policies ought to be undertaken to cushion the probable adverse effects of the increasing electricity demand. In that sense, energy policies may be more globally-effective in the residential sector than in others [ 8 ], as residential energy consumption is difficult to displace offshore, contrary to what is happening in other sectors [ 9 , 10 ]. Therefore, the analysis of the evolution of residential electricity use becomes especially interesting, and even more so in countries such as Algeria, in which substantial growth is expected. Since the seminal study by Kraft and Kraft [ 11 ], the energy-growth nexus have been widely analyzed. However, the empirical evidence is mixed in terms of the direction of causality between variables [ 12 ]. Most studies are related to electricity energy and developed countries [ 13 ], those referred specifically to Algeria being scarce. To our knowledge, only two studies specifically refer to Algeria. The study by Souhila and Kourbali [ 14 ] examined the relationships between energy and economic growth in the 1965–2008 period, finding unidirectional causality running from GDP to energy consumption. Likewise, Bélaïd and Abderrahmani [ 15 ] examined the causal relationship between electricity consumption, oil price and economic growth for Algeria over the period of 1971–2010. The authors found bidirectional causal relationships between electricity use and economic growth. In addition to these studies, the causal relationships between energy and economic growth in Algeria have been also examined in other papers referred to several countries. Among these, it may be cited those by Wolde-Rufael [ 16 , 17 ] related to African countries, those by Ozturk and Acaravci [ 18 ] and
Omri [ 19 ] referred to MENA countries, those by Squalli [ 20 ] referred to OPEC members and those by Ozturk et al. [ 18 ] referred to developing countries. In general, these papers find that causality runs from economic growth to energy or electricity consumption in Algeria, although the study by Ozturk amd Acaravci [ 18 ] does not find cointegration among the variables and that by Omri [ 19 ] finds
bidirectional causality. Regarding the analysis of the relationships between the residential energy consumption and income growth, most previous papers focus on the microeconomic behavior of households [ 21 – 23 ]. These studies find that growth in residential energy demand depends on the household’s income level. From a macroeconomic perspective, most of the studies that analyze the relationship between residential energy and income, estimate the short-run and the long-run elasticity of residential demand for electricity. Among them, Silk and Joutz [ 24 ] refer to the USA, Holtedahl and Joutz [ 25 ] to Taiwan, Hondroyiannis [ 26 ] to Greece, Filippini and Pachuari [ 27 ] to India, Narayan and Smyth [ 28 ] to Australia, Atakhanova and Howie [ 29 ] to Kazakhstan, Halicioglu [ 30 ] to Turkey, Nasir et al. [ 31 ] to Pakistan, Athukorala and Wilson [ 32 ] to Sri Lanka, Blázquez et al. [ 33 ] and Romero-Jordán et al. [ 34 ] to Spain, Atalla and Hunt [ 35 ] to the Gulf Cooperation Council countries, and Schulte and Heindl [ 36 ] to
Germany. Very little attention has been given to regions such as Africa and Latin America. Moreover, these previous studies do not consider how the relationships between residential electricity use and income may vary as income grows. In this regards, some previous studies have examined the non-linear relationships between economic growth and energy consumption, borrowing the idea of the EKC by testing the so called energy-EKC hypothesis [ 37 ]. This last hypothesis states that energy consumption increases with economic growth up to a certain income level, after which it declines. In line with the EKC hypothesis, the inverted-U path for energy use may been explained in terms of structural changes in the composition of economic output and energy efficiency gains [ 38 ,
]. The studies by Suri and Chapman [ 40 ], Richmond and Kaufmann [ 38 , 41 ], Nguyen-Van [ 39 ], Yoo and Lee [ 42 ], and Sbia et al. [ 43 ] find evidence for the existence of an inverted-U curve relationships between variables. Nevertheless, other studies fail to support the inverted-U curve hypothesis. Among them, it may be cited the study by Luzzati and Orsini [ 44 ], Zilio and Recalde [ 45 ],
Energies 2018, 11, 1656 3 of 18
and Pablo-Romero and De Jesús [ 46 ]. Most of these studies refers to international panel data, none of them being focused on Algeria. Focusing on the residential energy use, Yin et al. [ 47 ] include income per capita and its squared value as explanatory variables when analyzing the residential electricity consumption elasticity values in China. Likewise, Pablo-Romero et al. [ 48 ] also include income per capita squared and cubed variables when analyzing whether joining the Covenant of Mayors is reducing municipalities’ residential electricity consumption in Andalusia by testing an energy-environmental Kuznets curve. In the same way, income per capita in squared and cubed terms are also considered by Pablo-Romero and Sánchez-Braza [ 8 ] when estimating the energy demand, considering residential energy consumption and income for the EU-28 countries. Following these last papers, the relationship between residential electricity use and income is analyzed for Algeria in the period 1970–2013, by estimating a residential electricity consumption per capita demand function which depends on GDP per capita, its squared and cubed terms, the electricity prices, and the goods and services imports. This study enlarges the previous literature by focusing the analysis on electricity consumption of the residential sector. Additionally, to our knowledge, this is the first work to analyze the non-linearity relationships for residential electricity consumption and income for an African country, Algeria. Thus, knowledge of these relationships is important to better implement energy and environmental policies, especially in countries similar to Algeria, which are developing and increasing their electricity demand. The methodology applied is the extended autoregressive distributed lag model (ARDL) with break points. Considering break points appears to be convenient, as the Algerian GDP growth trend since 1970 to 2010 shows different patterns, which may be related to certain political decisions, mainly developed in the 1980s [ 15 ].
2 the methodology is explained. In Section 3 a descriptive analysis is made and the statistical information sources used are specified. In Section 4 the results are presented. In Section 5 the results are discussed. Finally, the main conclusions and policy implications are given in Section 6 . Yüklə 0,82 Mb. Dostları ilə paylaş:
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