Energy Consumption, Economic Growth, and Environmental Quality in Nigeria: Evidence from a Threshold Regression Approach.

Abstract

Nigeria’s economic growth is closely tied to its energy consumption, which remains heavily dependent on nonrenewable sources, particularly petroleum, to drive industrial and commercial activities. While this reliance has fueled economic growth and strengthened Nigeria’s position as a significant oil producer, it has simultaneously intensified environmental degradation. This study examines the interrelationships between energy consumption, economic growth, urbanization, and environmental quality in Nigeria using annual time series data from 1971 to 2020. Employing an autoregressive threshold (ART) testing approach, the analysis captures potential nonlinear dynamics among these variables. The results indicate that the initial phase of fossil fuel consumption contributes to slight improvements in environmental quality; however, long-run dependence on fossil energy significantly deteriorates ecological conditions through pollution and greenhouse gas emissions. The study highlights the urgent need for a structured transition toward renewable energy sources to improve environmental sustainability. Despite Nigeria’s low adoption of renewable technologies, the findings provide valuable insights for policymakers to promote clean energy and foster sustainable economic growth.