Towards a Carbon-Neutral Environment, the Role of Biomass Energy Consumption and Trade Openness in Sub-Saharan Africa: A Spatial Econometric Analysis

Energy consumption is known as the catalyst for economic growth, however, the association of CO 2 emissions with energy consumption has prompted policymakers to pursue types of energy that ensure sustainable development. This paper analyses the spillover effect of CO 2 emissions and the marginal effect of Biomass energy consumption on CO 2 emissions in Sub-Saharan Africa by applying the extended Stochastic Impacts by Regression on Population, Affluence, and Technology (STIRPAT) model together with the spatial econometric models. The likelihood ratio test and Wald test indicated that the Spatial Durbin Model was the most suitable model to explain the elasticities of the exogenous variables. Furthermore, the Hausman test performed revealed that the fixed-effects model was more adept than the random-effects model. The findings suggested that increasing biomass energy consumption in a local country turns to reduce the country’s own CO 2 emissions and also reduces the CO 2 emissions of its adjacent countries by 0.089% and 0.022% respectively. Whereas an increment in trade openness in a country pollutes its environment and that of its neighboring states by 0.163% and 0.035% respectively. Comparing the indirect effect of the employed exogenous variables, foreign direct investment exerted a heavier weight impact than the others. Overall the study spotlighted some policies suggestions for the Sub-Saharan Africa states’ energy market in the cause of controlling the emissions of CO 2 .