ECONOMIC INDICES AND ENERGY CONSUMPTION IN NIGERIA

Abstract

Energy consumption in Nigeria was observed to have been very low in spite of the nation’s abundant resource endowments. Successive administrations within the period churned out assorted policy measures aimed at improving energy access. This therefore, prompted an investigation of the impact of selected economic indices on energy consumption in Nigeria from 1990 to 2022. The study is anchored on the energy ladder theory in view of its suitability and central postulation that energy consumption is a function of economic indices. The autoregressive distributed lag (ARDL) method was employed to estimate the parameters of the 
model and the result revealed that economic growth, trade openness, urbanization and governance had positive impacts on the total energy consumption while energy prices and carbon emissions had negative impacts on the total energy consumption. The Granger causality tests revealed the presence of unidirectional causality running from renewable energy consumption to energy prices and also from trade openness to renewable energy consumption. Hence, the study concludes that Nigeria’s energy consumption is largely dominated by nonrenewable energy consumption. The study recommends that there should be removal of subsidy on fossil fuels and the proceeds channeled towards renewable energy resources. Also, should be investments on energy infrastructures to enhance accessibility, adoption of improved trade laws and stricter enforcement of the nation’s environmental laws.