Shaping Energy Transitions: Sectoral Demand, Climate Risk Exposure, and Renewable Pathways in Sub-Saharan Africa

Energy is a fundamental driver of economic growth, shaping productivity, industrialization, and long-term economic resilience. In sub-Saharan Africa (SSA), where energy access remains uneven and infrastructure is underdeveloped, understanding sector-specific energy demand is essential for designing sustainable energy strategies. This study examines the relationship between sectoral growth and energy consumption in 28 SSA countries from 2000 to 2021, utilizing a high-dimensional fixed effects approach to account for unobserved heterogeneity and enhance estimation precision. The findings reveal that the service sector exhibits the highest energy demand, reflecting its dependence on stable electricity and digital infrastructure. In contrast, the industrial and agricultural sectors exhibit relatively muted energy intensity due to gaps in mechanization and infrastructural constraints. The interaction between foreign direct investment and renewable energy demonstrates a notable synergy, where clean energy investments associated with foreign direct investment significantly reduce overall energy demand. Additionally, the study highlights the moderating role of climate vulnerability in shaping sectoral energy efficiency and enhancing efficiency in industry and agriculture while amplifying demand for services under high vulnerability. Furthermore, by introducing the energy transition staging framework, the study reveals how the impact of sectoral energy use evolves across countries at different stages of energy development, underscoring the need for stage-specific energy policy. These insights provide a robust framework for policymakers to promote targeted energy efficiency, leverage eco-investment synergies, and align energy planning with climate resilience and development pathways in SSA.