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The danger of climate change has over the years become a reality in the public domain. While efforts to mitigate climate change involve energy mix, energy efficiency and cleaner technology, financial development has also been considered as an important factor. Indicator of financial development may draw FDI and advanced degree of research and development which can accelerate economic growth and hence affect dynamism of environmental performance. This study examines the impacts of energy use and financial development indicators by source in the environment-growth-energy model for 90 countries categorized on the basis of income possession over the period 1980–2014. The study applies the panel analysis that accounts for cross-sectional dependence and heterogeneity of series used in the estimation. Results from panel Dynamic Ordinary Least Squares (DOLS) show that in all the categories of countries, fossil fuel energy use and GDP per capita are found to be the major drivers of CO 2 emissions though fossil fuel energy use possesses the bigger elasticities. Population however, displays a sign contrary to expectation regarding economic theory in high income countries. Renewable energy and financial development on the other hand are capable of reducing CO 2 emissions. However, the magnitude of the long-run elasticity of CO 2 emissions with respect to renewable energy use and financial development are much greater in the models with M 2 /GDP than the model with M 2 /Reserve especially in the high income countries. Policies should be geared towards stimulating investments in renewable energy technology. There is need to develop robust financial systems to lend financial credence to research institutes to work towards producing energy that have less carbon or are carbon-free. [ABSTRACT FROM AUTHOR]

Climate change mitigation is a topical issue with growing debate in the context of the renewable energy transition, global partnership, governance, and economic growth. The complexness of climate change makes it difficult to predict relationships and formulate policies across varied countries. Motivated by the core mandate of the Kyoto Protocol, we examined the individual, combined and interactive impact of growth in income, renewable energy, foreign direct investment, and governance on greenhouse gas emissions. We decomposed the relationships to account for the theories of scale effect, composition effect and technique effect. The study utilized a dynamic heterogeneous estimation technique with a panel data from 1990 to 2017 in 47 Sub-Saharan African countries. Our adopted empirical framework made it possible to account for heterogeneity, a situation that may be prevalent in countries with varied economic and environmental policies. The empirical results revealed that increasing the share of renewable energy by 1% declines greenhouse gas emissions by as much as 35.32% (95% Confidence interval) while a 1% increase in the coupling effect of income level, governance, and renewable energy consumption intensifies climate change by 0.79%. The interactive effects of scale, composition, and technique indicators were found to worsen climate change. The decoupling effect revealed that while foreign direct investment, income level, and governance exacerbate climate change, renewable energy consumption lessens climate change and its impact. From a policy perspective, the magnitude of the technique effect of renewable energy consumption depends on, inter alia , its share in the energy portfolio, technological innovation, and country-specific policy instruments. The study demonstrated that decoupling renewable energy from economic growth propels the transition from fossil fuels, leading to energy efficiency— explaining the decline in GHG emissions. • Dynamic heterogeneous method is used to develop 13 conceptual tools for mitigating climate change. • Climate change is decomposed into scale, composition and technique effects. • Increasing renewable energy consumption reduces climate change in Sub-Saharan African. • Income level exacerbates pollution intensities which affect climate change and its impact. • The study confirmed the validity of the Pollution Haven Hypotheses in Africa. [ABSTRACT FROM AUTHOR]