When does renewable energy reduce carbon intensity? The moderating role of resource dependence in SSA–MENA economies

Abstract

This study examines how natural resource dependence affects the effectiveness of renewable energy in reducing carbon intensity, with implications for the institutional and economic conditions that shape energy transition investments and public policy in emerging markets. Using a panel of 54 Sub-Saharan Africa, Middle East, and North Africa economies (2000–2023), we employ panel cointegration techniques, PMG-ARDL estimation, and system GMM to address persistence and endogeneity. The results show that renewable energy reduces carbon intensity in both the short and long runs. However, resource dependence introduces a dynamic moderating effect: it weakens the short-run impact of renewables but strengthens long-run decarbonization when resource rents are efficiently allocated. These effects are more pronounced in resource-rich economies. The findings highlight the role of institutional quality and allocation efficiency in shaping energy transition outcomes, with implications for firms and regulators in resource-dependent economies.