Table 3: Fixed Effects and Quantile Fixed Effects Regressions (2) Fixed Effects Q.10 Q.25 Q.50 Q.75 Q.90 Log of GDP 0.2356** (0.019) 0.3535** (0.017) 0.3049*** (0.005) 0.2341*** (0.002) 0.1724* (0.060) 0.1183 (0.365) Renewable Energy -0.0162** (0.018) -0.0179*** (0.001) -0.0172*** (0.000) -0.0162*** (0.000) -0.0152*** (0.000) -0.0144*** (0.003) Financial Development 0.0099** (0.011) 0.0097*** (0.005) 0.0098*** (0.000) 0.0099*** (0.000) 0.0101*** (0.000) 0.0102*** (0.001) Trade 0.0021** (0.018) 0.0016 (0.123) 0.0018** (0.016) 0.0022*** (0.000) 0.0025*** (0.000) 0.0028*** (0.003) Regulatory Quality -0.1032 (0.260) -0.1916* (0.099) -0.1552* (0.069) -0.1021* (0.084) -0.0558 (0.438) -0.0152 (0.882) Constant -2.2535** (0.016) R- squared Overall 0.6463 F-Statistics 9.34*** (0.000) Number of Groups 39 Number of Observations 492 492 492 492 492 492 Source: Author’s computation.Note: ***, ** and * represents statistical significance at 1%, 5% and 10% respectively. Fixed Effect estimates computed with robust standard errors to account for heteroskedasticity. The following findings can be established. First, findings from both estimation techniques show that renewable energy consistently decreases carbon dioxide (CO2) emissions. Second, the negative effect is a decreasing function of CO2emissions. In other words, countries with higher levels of CO2emissions consistently experience a less negative effect compared to their counterparts with lower levels of CO2emissions. Third,
14 the control variables largely have the expected signs. Accordingly, economic prosperity, financial development and trade are positively correlated with CO2emissions while economic governance in terms of government effectiveness and regulatory quality are negatively correlated with CO2emissions. However, while government effectiveness insignificantly reduces CO2an emission, regulatory quality significantly reduces CO2emissions. 5. Concluding implications and future research directions This paper has complemented existing literature by assessing the conditional relationship between renewable energy and environmental quality in a sample of 40 African countries for the period 2002 to 2017. The empirical evidence is based on fixed effects regressions and quantile fixed effects regressions. The findings from both estimation techniques show that renewable energy consistently decreases carbon dioxide (CO2) emissions. Moreover, the negative effect is a decreasing function of CO2emissions. In other words, countries with higher levels of CO2emissions consistently experience a less negative effect compared to their counterparts with lower levels of CO2emissions. In what follows attendant policy implications are discussed. First, the fact that renewable decreases CO2emissions is an indication that in order to mitigate CO2emissions in Africa in the light of sustainable development goals pertaining to energy, sampled policies will need to tailor policies that favor the replacement of non-renewable resources of energy with renewable sources. Some policies that can be implemented in this direction include: making environmental conscious political decisions aimed at encouraging the use of green energy sources such as solar and wind power for electricity generation. Adopting green energy sources in the industry also reduces CO2emissions as the industry is one of the leading contributors of CO2emissions not just in sub Saharan Africa but also in the rest of the world.