IDEAS home Printed from https://ideas.repec.org/a/gam/jeners/v18y2025i14p3668-d1699337.html
   My bibliography  Save this article

From Fossil Dependence on Sustainability: The Effects of Energy Transition, Green Growth, and Financial Inclusion on Environmental Degradation in the MENA Region

Author

Listed:
  • Sami Mustafa Omar

    (Institute of Social Sciences, University of Mediterranean Karpasia, Northern Cyprus, Mersin 10, Turkey)

  • Wagdi M. S. Khalifa

    (Department of Business Administration, University of Mediterranean Karpasia, Northern Cyprus, Mersin 10, Turkey)

  • Tolga Oz

    (Institute of Social Sciences, University of Mediterranean Karpasia, Northern Cyprus, Mersin 10, Turkey)

Abstract

Amid growing environmental concerns and an increasing push for sustainable development, countries in the Middle East and North Africa (MENA) region have taken proactive steps toward green growth, energy transition, and technological innovation. As a result, this study examines the effects of green growth, energy transition, technological innovation, financial inclusion, and urbanization on environmental sustainability in the Middle East and North Africa (MENA) region. Moreover, this study breaks new ground by exposing the hidden environmental costs of financial inclusion, urbanization, and technological innovation in the MENA region’s development trajectory, thereby providing compelling evidence for rethinking sustainability through an integrated approach that aligns economic ambition with ecological responsibility. Data for the studied variables were sourced from the World Bank database covering the period 1990 to 2021. The results show that green growth and energy transition significantly reduce CO 2 emissions, supporting the idea that economic expansion aligned with environmental priorities can contribute to ecological improvement. However, the impact of technological innovation is statistically insignificant, indicating that innovation in the region has not yet translated into meaningful environmental gains, possibly due to the dominance of non-green or industrial-focused innovation. Financial inclusion is found to increase CO 2 emissions, likely by facilitating greater access to credit and financial services that fuel energy-intensive consumption and production activities. Similarly, urbanization also contributes to rising emissions, reflecting the unsustainable nature of urban growth in many MENA region. Based on this study, we advocate for a coordinated regional approach to climate and energy policy, underpinned by shared governance and collective action.

Suggested Citation

  • Sami Mustafa Omar & Wagdi M. S. Khalifa & Tolga Oz, 2025. "From Fossil Dependence on Sustainability: The Effects of Energy Transition, Green Growth, and Financial Inclusion on Environmental Degradation in the MENA Region," Energies, MDPI, vol. 18(14), pages 1-22, July.
    • Handle: RePEc:gam:jeners:v:18:y:2025:i:14:p:3668-:d:1699337
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1996-1073/18/14/3668/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1996-1073/18/14/3668/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ben Cheikh, Nidhaleddine & Rault, Christophe, 2024. "Financial inclusion and threshold effects in carbon emissions," Energy Policy, Elsevier, vol. 192(C).
    2. Hashem Pesaran, M. & Yamagata, Takashi, 2008. "Testing slope homogeneity in large panels," Journal of Econometrics, Elsevier, vol. 142(1), pages 50-93, January.
    3. Joakim Westerlund, 2007. "Testing for Error Correction in Panel Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 69(6), pages 709-748, December.
    4. Jun Zhao & Farhad Taghizadeh-Hesary & Kangyin Dong & Xiucheng Dong, 2023. "How green growth affects carbon emissions in China: the role of green finance," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 36(1), pages 2090-2111, March.
    5. Khan, Samiha & Murshed, Muntasir & Ozturk, Ilhan & Khudoykulov, Khurshid, 2022. "The roles of energy efficiency improvement, renewable electricity production, and financial inclusion in stimulating environmental sustainability in the Next Eleven countries," Renewable Energy, Elsevier, vol. 193(C), pages 1164-1176.
    6. M. Hashem Pesaran, 2007. "A simple panel unit root test in the presence of cross-section dependence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(2), pages 265-312.
    7. Sinha, Avik & Sengupta, Tuhin & Alvarado, Rafael, 2020. "Interplay between Technological Innovation and Environmental Quality: Formulating the SDG Policies for Next 11 Economies," MPRA Paper 104247, University Library of Munich, Germany, revised 2020.
    8. repec:erg:wpaper:1713 is not listed on IDEAS
    9. Muhammad Adnan & Baohua Xiao & Shaheen Bibi & Peiwen Xiao & Peng Zhao & Haiyan Wang & Muhammad Ubaid Ali & Xianjin An, 2024. "Known and Unknown Environmental Impacts Related to Climate Changes in Pakistan: An Under-Recognized Risk to Local Communities," Sustainability, MDPI, vol. 16(14), pages 1-27, July.
    10. Min Zhang & Tomiwa Sunday Adebayo & Abraham Ayobamiji Awosusi & Muhammad Ramzan & Caner Otrakçı & Dervis Kirikkaleli, 2024. "Toward sustainable environment in Italy: The role of trade globalization, human capital, and renewable energy consumption," Energy & Environment, , vol. 35(4), pages 2058-2086, June.
    11. Mohsin Shabir, 2024. "Does Financial Inclusion Promote Environmental Sustainability: Analyzing the Role of Technological Innovation and Economic Globalization," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(1), pages 19-46, March.
    12. Ahmed Dirie, Khadar & Maamor, Selamah & Alam, Md. Mahmudul, 2024. "Impacts of climate change in post-conflict Somalia: Is the 2030 Agenda for SDGs endangered?," World Development Perspectives, Elsevier, vol. 35(C).
    13. Machado, José A.F. & Santos Silva, J.M.C., 2019. "Quantiles via moments," Journal of Econometrics, Elsevier, vol. 213(1), pages 145-173.
    14. Zhang Chenghu & Muhammad Arif & Khurram Shehzad & Mahmood Ahmad & Judit Oláh, 2021. "Modeling the Dynamic Linkage between Tourism Development, Technological Innovation, Urbanization and Environmental Quality: Provincial Data Analysis of China," IJERPH, MDPI, vol. 18(16), pages 1-21, August.
    15. Xinzhong Zou & Shiheng Yang & Ridwan Lanre Ibrahim & Mamdouh Abdulaziz Saleh Al-Faryan, 2024. "Probing the environmental impacts of structural transition and demographic mobility in Africa: Does technological innovation matter?," Energy & Environment, , vol. 35(5), pages 2699-2725, August.
    16. Auty, R. & Warhurst, A., 1993. "Sustainable development in mineral exporting economies," Resources Policy, Elsevier, vol. 19(1), pages 14-29, March.
    17. Gao, Song & Zhu, Yating & Umar, Muhammad & Kchouri, Bilal & Safi, Adnan, 2024. "Financial inclusion empowering sustainable technologies: Insights into the E-7 economies from COP28 perspectives," Technological Forecasting and Social Change, Elsevier, vol. 201(C).
    18. Lingui Qin & Syed Raheem & Muntasir Murshed & Xu Miao & Zeeshan Khan & Dervis Kirikkaleli, 2021. "Does financial inclusion limit carbon dioxide emissions? Analyzing the role of globalization and renewable electricity output," Sustainable Development, John Wiley & Sons, Ltd., vol. 29(6), pages 1138-1154, November.
    19. Opeoluwa Seun Ojekemi & Mehmet Ağa & Cosimo Magazzino, 2023. "Towards Achieving Sustainability in the BRICS Economies: The Role of Renewable Energy Consumption and Economic Risk," Energies, MDPI, vol. 16(14), pages 1-18, July.
    20. Bekun, Festus Victor, 2024. "Race to carbon neutrality in South Africa: What role does environmental technological innovation play?," Applied Energy, Elsevier, vol. 354(PA).
    21. Cai, Xuesen & Wei, Changjing, 2023. "Does financial inclusion and renewable energy impede environmental quality: Empirical evidence from BRI countries," Renewable Energy, Elsevier, vol. 209(C), pages 481-490.
    22. Le, Thai-Ha & Le, Ha-Chi & Taghizadeh-Hesary, Farhad, 2020. "Does financial inclusion impact CO2 emissions? Evidence from Asia," Finance Research Letters, Elsevier, vol. 34(C).
    23. Ackah, Ishmael & Kizys, Renatas, 2015. "Green growth in oil producing African countries: A panel data analysis of renewable energy demand," Renewable and Sustainable Energy Reviews, Elsevier, vol. 50(C), pages 1157-1166.
    24. Chien, Fengsheng & Ajaz, Tahseen & Andlib, Zubaria & Chau, Ka Yin & Ahmad, Paiman & Sharif, Arshian, 2021. "The role of technology innovation, renewable energy and globalization in reducing environmental degradation in Pakistan: A step towards sustainable environment," Renewable Energy, Elsevier, vol. 177(C), pages 308-317.
    25. Mohammad Al-Saidi, 2020. "From Economic to Extrinsic Values of Sustainable Energy: Prestige, Neo-Rentierism, and Geopolitics of the Energy Transition in the Arabian Peninsula," Energies, MDPI, vol. 13(21), pages 1-16, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Muntasir Murshed & Uzma Khan & Aarif Mohammad Khan & Ilhan Ozturk, 2023. "Can energy productivity gains harness the carbon dioxide‐inhibiting agenda of the Next 11 countries? Implications for achieving sustainable development," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(1), pages 307-320, February.
    2. Qiang Ma & Xue Han & Ramez Abubakr Badeeb & Zeeshan Khan, 2022. "On the sustainable trade development: Do Financial inclusion and eco‐innovation matter? Evidence from method of moments quantile regression," Sustainable Development, John Wiley & Sons, Ltd., vol. 30(5), pages 1044-1055, October.
    3. Murshed, Muntasir & Ahmed, Rizwan & Khudoykulov, Khurshid & Kumpamool, Chamaiporn & Alrwashdeh, Nusiebeh Nahar Falah & Mahmood, Haider, 2023. "Can enhancing financial inclusivity lower climate risks by inhibiting carbon emissions? Contextual evidence from emerging economies," Research in International Business and Finance, Elsevier, vol. 65(C).
    4. Han, Guixin & Cai, Xuesen, 2024. "The linkages among natural resources, sustainable energy technologies and human capital: An evidence from N-11 countries," Resources Policy, Elsevier, vol. 90(C).
    5. Ma, Fenfen & Saleem, Hummera & Ding, Xueting & Nazir, Sidra & Tariq, Salman, 2024. "Do natural resource rents, green technological innovation, and renewable energy matter for ecological sustainability? Role of green policies in testing the environmental kuznets curve hypothesis," Resources Policy, Elsevier, vol. 91(C).
    6. Xueying Meng & Tianqing Li & Mahmood Ahmad & Guitao Qiao & Yang Bai, 2022. "Capital Formation, Green Innovation, Renewable Energy Consumption and Environmental Quality: Do Environmental Regulations Matter?," IJERPH, MDPI, vol. 19(20), pages 1-14, October.
    7. Wu, Zihao & Gao, Jun & Xu, Hui & Shi, Guanqun & Zaidan, Amal Mousa & Ageli, Mohammed Moosa, 2023. "Visualizing symmetric and asymmetric settings in MMQR for natural resources extraction and economic performance: A COVID-19 perspective," Resources Policy, Elsevier, vol. 85(PB).
    8. Alvarado, Rafael & Tillaguango, Brayan & Murshed, Muntasir & Ochoa-Moreno, Santiago & Rehman, Abdul & Işık, Cem & Alvarado-Espejo, Johana, 2022. "Impact of the informal economy on the ecological footprint: The role of urban concentration and globalization," Economic Analysis and Policy, Elsevier, vol. 75(C), pages 750-767.
    9. Na Xin & Zhuoting Xie, 2023. "Financial inclusion and trade adjusted carbon emissions: Evaluating the role of environment related taxes employing non‐parametric panel methods," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(1), pages 78-90, February.
    10. Hassan, Hassan & Tian, Shanwu & Safi, Adnan & Umar, Muhammad, 2024. "Climate commitments and financial moderation: A deep dive into renewable energy's influence on OECD carbon footprints," Economic Analysis and Policy, Elsevier, vol. 81(C), pages 1484-1495.
    11. Li, Menghan & Zhang, Kaiyue & Alamri, Ahmad Mohammed & Ageli, Mohammed Moosa & Khan, Numan, 2023. "Resource curse hypothesis and sustainable development: Evaluating the role of renewable energy and R&D," Resources Policy, Elsevier, vol. 81(C).
    12. Zheng, Chengting & Wu, Shufang & Teng, Yin-Pei & Wu, Shuzhao & Wang, Zhe, 2023. "Natural resources, tourism resources and economic growth: A new direction to natural resources perspective and investment," Resources Policy, Elsevier, vol. 86(PB).
    13. Badeeb, Ramez Abubakr & Wang, Bo & Zhao, Jun & Khan, Zeeshan & Uktamov, Khusniddin Fakhriddinovich & Zhang, Changyong, 2023. "Natural resources extraction and financial inclusion: Linear and non-linear effect of natural resources on financial sector," Resources Policy, Elsevier, vol. 85(PA).
    14. Haiying Liu & Avik Sinha & Mehmet Akif Destek & Majed Alharthi & Muhammad Wasif Zafar, 2022. "Moving toward sustainable development of sub‐Saharan African countries: Investigating the effect of financial inclusion on environmental quality," Sustainable Development, John Wiley & Sons, Ltd., vol. 30(6), pages 2015-2024, December.
    15. Hossain, Mohammad Razib & Dash, Devi Prasad & Das, Narasingha & Ullah, Ehsan & Hossain, Md. Emran, 2024. "Green energy transition in OECD region through the lens of economic complexity and environmental technology: A method of moments quantile regression perspective," Applied Energy, Elsevier, vol. 365(C).
    16. Bilgehan Tekin, 2024. "The catalyzing role of financial inclusion in decoding environmental challenges and fostering a sustainable future in BRICS‐T," Economics and Politics, Wiley Blackwell, vol. 36(3), pages 1572-1603, November.
    17. Murshed, Muntasir & Ahmed, Rizwan & Al-Tal, Raad Mahmoud & Kumpamool, Chamaiporn & Vetchagool, Witchulada & Avarado, Rafael, 2023. "Determinants of financial inclusion in South Asia: The moderating and mediating roles of internal conflict settlement," Research in International Business and Finance, Elsevier, vol. 64(C).
    18. Gu, Xiao & Shen, Xi & Zhong, Xiangming & Wu, Tong & Rahim, Syed, 2023. "Natural resources and undesired productions of environmental outputs as green growth: EKC in the perspective of green finance and green growth in the G7 region," Resources Policy, Elsevier, vol. 82(C).
    19. Muhammad Imran & Md Shabbir Alam & Zhang Jijian & Ilhan Ozturk & Salman Wahab & Mesut Doğan, 2025. "From resource curse to green growth: Exploring the role of energy utilization and natural resource abundance in economic development," Natural Resources Forum, Blackwell Publishing, vol. 49(2), pages 2025-2047, May.
    20. Li, Menghan & Zaidan, Amal Mousa & Ageli, Mohammed Moosa & Wahab, Salman & Khan, Zeeshan, 2023. "Natural resources, environmental policies and renewable energy resources for production-based emissions: OECD economies evidence," Resources Policy, Elsevier, vol. 86(PA).

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jeners:v:18:y:2025:i:14:p:3668-:d:1699337. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.