Abstract

This study explored the relationship between energy commodities, economic growth, and Nigeria's carbon dioxide (CO?) emissions spanning from 1981 to 2021. Employing the Vector Error Correction Mechanism (VECM) process, the study revealed a negative correlation between fossil fuel consumption, economic growth, and carbon dioxide emissions. Long-term elasticities indicate that carbon dioxide emissions would rise by 24 and 211% if both fossil fuel consumption and economic growth decreased by 1%, contradicting the Environmental Kuznets Curve (EKC) theory in Nigeria. Nevertheless, a positive correlation was observed between carbon dioxide emissions and the total annual population. As per the error correction model (ECM = -2.64441), two years are required for carbon dioxide emissions to return to long-term equilibrium, with 26.4% of a shock in the variable resolved within a year. Upon closer examination of the impulse response function, it is evident that GDPPC and FFC will exert a negative short- and long-term impact on CO? emissions. The study proposes that Nigeria's government should implement a comprehensive strategy to bolster investments in renewable energy. This encompasses creating a stable policy environment, establishing ambitious targets for renewable energy capacity, providing financial incentives, and introducing feed-in tariffs, given that the country's consumption of fossil fuels has not yet reached a point where emissions are increasing.

Key words: CO? emission, fossil fuel consumption, GDP per capita, VECM.