EFFECT OF ELECTRICITY POWER GENERATION AND ECONOMIC GROWTH ON ENVIRONMENTAL DEGRADATION IN NIGERIA: A DISAGGRGATED ANALYSIS

Abstract

This study investigates the effect of electricity generation on economic growth and environmental degradation in Nigeria. Unlike previous studies that focus largely on energy consumption, this research emphasizes energy production, particularly electricity generated from natural gas and hydro sources, while controlling for fossil fuel consumption, population, and per capita income. The study covers the period 1990 to 2023 using annual time series data sourced from the World Development Indicators. The Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) unit root tests reveal a mixture of I(0) and I(1) variables, making the Autoregressive Distributed Lag (ARDL)bounds testing approach appropriate. The ARDL technique was employed to estimate both short-and long-run relationships, while Granger causality tests were conducted to establish direction of causality. Findings indicate that hydro-based electricity generation significantly reduces CO₂ emissions in the long run, while natural gas-based generation produces an insignificant effect on emissions. Fossil fuel consumption significantly increases CO₂ emissions, whereas per capita income and population growth have mixed but generally insignificant effects. Granger causality results reveal unidirectional causality from natural gas electricity generation to CO₂ emissions and from fossil fuel consumption to CO₂ emissions. The study concludes that electricity generation mix and fossil fuel dependence are central to Nigeria’s environmental outcomes. It recommends diversifying electricity generation towards renewables, improving electricity supply to reduce reliance on generating sets, and strengthening public transport systems as key measures to mitigate CO₂ emissions and promote sustainable growth.