The asymmetric effect of biomass energy use on environmental quality: empirical evidence from the Congo Basin

The growing environmental concerns in recent decades have orientated experts’ awareness and interest toward environmentally benign research and practices. Efficient utilization of biomass energy features prominently as a cleaner source of energy, a way of reducing the nefarious environmental impacts, and an integral effort to achieve Sustainable Development Goals. Biomass energy usage varies across spatial locations and needs considerable analysis in order to control its impacts. This study investigates the role of biomass energy use on environmental quality while controlling for growth, natural resource rents, and globalization in the Congo Basin from 1980 to 2018. Second-generation econometric techniques like the Cross-Sectional Augmented Dickey-Fuller, bootstrapped co-integration, panel-corrected standard errors, and other robustness checks are utilized for the analyses. The results of the Cross-Sectional Augmented Dickey-Fuller test and bootstrapped co-integration estimates indicate that units are interdependent and variables are co-integrated paving the way for further estimations. The outcomes of the panel-corrected standard errors suggest that (i) biomass energy use promotes environmental quality while (ii) natural resources rent, economic growth, and globalization exert deteriorating effects on environmental quality; (iii) the Dumitrescu Hurlin causality test indicates that both natural resources rent and globalization indirectly affect environmental quality through economic growth. This study represents one of the few to test the implications of biomass energy use on environmental quality in the Congo Basin, motivated by the novel Kindergarten Rule model, which highlights the effect of endogenous technological development in pollution reduction, and helps companies reduce compliance costs despite rising production. Based on these results, the emission reduction potential of biomass energy usage is recognized in the Congo Basin, holding other variables constant. To maintain its status as the world's leading carbon sink, policymakers across the region could start promoting efficient biomass energy technologies while shifting energy-sourcing policies toward renewable energy production. Additionally, for natural resources rent, policymakers could invest heavily in research and development of biomass energy to improve environmental quality while levying heavy taxes on natural resource extraction. Moreover, given the relationship between sound money, trade freedom, and natural resource rents, institutional quality reforms are needed to regulate pollution from natural resource rent in the Congo Basin. Further research could focus on the qualitative determinants of environmental quality in this region or a project-based study by involving multiple actors and disciplines in order to uncover, assess and address the uneven impacts on different social groups or regions as the case may be.