Environmental Science and Pollution Research

https://doi.org/10.1007/s11356-021-17179-x

RESEARCH ARTICLE

The importance of facilitating renewable energy transition for abating

CO2 emissions in Morocco
Soufiane Bouyghrissi1 · Muntasir Murshed2 · Abhinav Jindal3,4 · Abdelmoumen Berjaoui5 · Haider Mahmood6 ·
Maha Khanniba7

Received: 12 August 2021 / Accepted: 20 October 2021

© The Author(s), under exclusive licence to Springer-Verlag GmbH Germany, part of Springer Nature 2021

Abstract
Achieving environmental sustainability has become a core policy agenda of the Moroccan government. The nation’s mono-
tonic dependence on fossil fuels for meeting the local energy demand has been acknowledged as the major cause of envi-
ronmental distress. Besides, Morocco has traditionally been a major importer of fossil fuels whereby the nation’s fossil fuel
dependency could not be phased out to a large extent. Consequently, the greenhouse gas emission figures of Morocco have
persistently surged over the years. Moreover, Morocco has large reserves of untapped renewable energy sources which can be
employed for producing power without significantly degrading the environment. Against this backdrop, this study explores
the renewable energy consumption-carbon dioxide emissions nexus, controlling for economic growth, financial develop-
ment, and foreign direct investment inflows, in the context of Morocco over the period between 1980 and 2017. In addition,
along with the direct impacts, the indirect environmental impacts associated with renewable energy consumption are also
scrutinized in this study. The empirical strategy involves the application of econometric methods that are robust to handling
structural break issues in the data. Overall, the results reveal that renewable energy consumption curbs carbon dioxide emis-
sions both in the short and long run. In contrast, financial development and foreign direct investment inflows boost carbon
dioxide emissions in Mexico. However, these adverse environmental impacts are partially neutralized by facilitating greater
renewable energy use within Morocco. The results indicate that renewable energy consumption interacts with financial
development and foreign direct investment inflows to jointly reduce the carbon dioxide emission figures of Morocco in the
long run. Furthermore, the findings also validate the environmental Kuznets curve hypothesis in the long run only. In line
with these key findings, it is recommended that the Moroccan government should adopt relevant policies that can help the
nation overcome the existing barriers faced in transitioning from non-renewable to renewable energy use. Simultaneously,
it is also necessary for Morocco to achieve environmentally sustainable economic growth by greening its financial sector
and revisiting its financial globalization policies.

Keywords Renewable energy consumption · CO2 emissions · Economic growth · Financial development · Foreign direct
investments · EKC hypothesis · ARDL

Responsible Editor: Ilhan Ozturk

4
* Muntasir Murshed NTPC Ltd., NTPC Bhawan, Lodhi Road, New Delhi 110003,
muntasir.murshed@northsouth.edu India
5
* Abhinav Jindal Faculty of Legal, Economic and Social Sciences, Mohamed
fi17abhinavj@iimidr.ac.in V University, Rabat, Morocco
6
1 Department of Finance, College of Business Administration,
Laboratory of Economics and Organization Management.
Prince Sattam Bin Abdulaziz University, 173, Alkharj 11942,
Faculty of Economics and Management, Ibn Tofail
Saudi Arabia
University, Kenitra, Morocco
7
2 National School of Business and Management, Hassan II
School of Business and Economics, North South University,
University, Casablanca, Morocco
Dhaka 1229, Bangladesh
3
Economics Area, Indian Institute of Management Indore,
Rau‑Pithampur Road, Indore 453556, India

13
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Introduction
Recognizing climate change as a potential threat to envi-
ronmental and socioeconomic well-beings, the Paris
Climate Change Agreement was signed in 2015. This
agreement has legally bounded the majority of the world
economies to implement greenhouse gas emission-abating
strategies to limit global warming to below 2° Celsius, and
preferably reduce it further to below 1.5 degrees Celsius,
above to the pre-industrial level (Rau et al. 2018; Ullah
et al. 2020; Rehman et al. 2021). Moreover, the persis-
tent rise in Carbon dioxide (CO2) emissions around the
globe has triggered concerns among the fossil fuel-reliant
nations that have traditionally settled for higher economic
gains at the expense of adverse environmental outcomes
(Shahbaz et al. 2020; Li et al. 2021; Gyamfi et al. 2021).
These nations, often characterized as developing econo-
mies with low levels of technological innovation, have
predominantly utilized the local and imported fossil fuels
for producing electricity; consequently, the fossil fuel
dependency within their respective power sectors has
substantially contributed to their economic growth but
has simultaneously jeopardized environmental quality
(Shahbaz et al. 2014). However, in the contemporary era,
it has become unimaginable to facilitate economic growth
without ensuring environmental harmony by limiting the
rise in CO2 emissions, in particular. As a result, achiev-
ing environmentally sustainable economic growth has
emerged as a global agenda. In this regard, recent studies
have emphasized various macroeconomic variables that
can help decouple environmental degradation from eco-
nomic growth (Zhang et al. 2020; Wang et al. 2022a)
Like most of the fossil fuel-dependent developing
nations worldwide, Morocco has also recognized the
importance of abating CO2 emissions for countering the
aggravation of its environmental quality. Accordingly, the
nation ratified the United Nations Framework Convention
on Climate Change (UNFCCC) in 1995. Later on, it signed
the Kyoto Protocol in 1997 and endorsed it in 2002 (HCP,
Fig. 1  The trends in CO2 emis-
sions and RE consumption in
Morocco. Note: The total CO2
% of total final energy consumption
emission figures are presented
along the secondary (right) axis.
Source: World Development
Indicators (World Bank 2021)
13
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Environ Sci Pollut Res
2015). Morocco also organized the seventh Conference
of Parties (COP), known as COP7, in Marrakech in 2001,
which aimed at adopting all the legal rules pertinent for
the ratification and effective implementation of the Kyoto
Protocol. Also, the country hosted the COP22 to the UNF-
CCC in Marrakech in 2016, which precisely focused on
identifying mechanisms necessary for tackling climate
change. The COP22 was a great opportunity for Morocco
to highlight the progress it made in the context of trans-
forming its pollution-intensive economy into a green one,
especially by incorporating renewable energy (RE) into
the national energy system in order to reduce fossil fuel
uses and mitigate the energy use-related CO2 emissions.
However, despite being an active signatory member of the
global climate change prevention initiatives, Morocco has
not managed to curb its aggregate CO2 emission figures
(World Bank 2021). This failure can largely be credited to
the nation’s unsuccessful attempts to lessen its fossil fuel
dependency. Subsequently, Morocco is enduring multifac-
eted climate change-related adversities including coastline
erosion and desertification (World Bank 2019).
The CO2 emission figures of Morocco have steadily risen
over the years. Between 1971 and 2018, the annual level of CO2
emissions has multiplied by more than eightfold, while the CO2
emissions per capita figures have risen by around 4 times (World
Bank 2021). Hence, considering both these trends, it can be
asserted that the quality of the environment in Morocco has
persistently aggravated over the last six decades or so. Figure 1
graphically illustrates the contrasting trends in Morocco’s RE
consumption shares and total annual CO2 emission levels.
It is observed that between 1990 and 2018, the fossil fuel
dependency of Morocco has significantly increased which is
evident from the decline in the share of renewables in Morocco’s
total final energy consumption figures. On the other hand, the
annual CO2 emission figures have steadily gone up. Therefore,
it can be assumed that the monotonic fossil fuel dependency in
Morocco is responsible for the nation’s environmental problems.
Currently, about 93% of Morocco’s energy demand is met by
imported fossil fuels. The nation imports large volumes of
18
65000
16
55000
kilotons
14 45000
12 35000
10 25000
1990-95 1996-2000 2001-05 2006-10 2011-15 2016-18
CO2 emissions Renewable Energy Consumption
Environ Sci Pollut Res
petroleum and natural gas from the international markets
(Bahgat 2013). As a result, such hefty volumes of energy imports
have not only surged the nation’s import bills, putting pressures
on its economy, but have also boosted Morocco’s fossil fuel use-
based CO2 emissions within all the major economic sectors.
Therefore, underscoring the necessity to attain environmental
sustainability, reducing energy-related CO2 emissions by
making a RE transition has become an integral agenda of the
Moroccan government. Consequently, Morocco has declared
an ambitious target of substantially enhancing its renewable
electricity generation capacity, aiming to generate around 52%
of the nation’s electricity output using renewable sources by
2030 (Choukri et al. 2017). It is believed that this declaration is
a strategic move made by the Moroccan government in respect
of complying with the SDG commitments.
Among the different types of RE, solar power is claimed
to be most appropriate for facilitating the RE transition in
Morocco. The nation has some of the largest solar parks in the
world, especially the Noor Ouarzazate solar complex which was
inaugurated in 2016. Under this project, there are three opera-
tional power plants, namely NOOR I, NOOR II, and NOOR
III, and a photovoltaic plant named NOOR IV. Collectively,
these four plants have a total installed capacity of generating
580 megawatts of renewable electricity. Despite the fact that
the core objective of the Noor Ouarzazate solar complex was to
develop a total electricity generation capacity of at least 2000
megawatts by 2020, the targets were left unattained particularly
due to the technological constraints responsible for inhibited
renewable power generation in Morocco. Moreover, although
this project was also envisioned to abate emission of 7,62,000
tons of CO2 per year over the timespan of 25 years of its opera-
tion, the failure to significantly enhance the electricity generation
capacity of the four power plants casts a shadow of doubt on this
CO2 emission-reduction objective. Consequently, in response
to the national declaration of producing more than 50% of the
national electricity output from renewables by 2030, the renew-
able electricity output share in Morocco’s aggregate electric-
ity output has merely been less than 15% (World Bank 2021).
Moreover, between 2010 and 2016, the renewable electricity
output shares in Morocco have declined by more than three
percentage points, which further certifies the rising fossil fuel
dependency trends within the power sector of Morocco. There-
fore, these statistics once again indicate that the Moroccan elec-
tricity sector has traditionally faced constraints that have held
back the nation’s prospects of boosting the renewable electricity
generation capacity. On that account, it is extremely important
to identify the channels through which these constraints can be
wiped off.
Against this milieu, this study attempts to examine the
effects of renewable energy use on CO2 emissions, controlling
for financial development, economic growth, and foreign direct
investment (FDI) inflows, in the context of Morocco over the
1971–2018 period. The findings from this study can be helpful
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for Morocco in multiple ways. Firstly, it is expected to identify
the macroeconomic factors that are responsible for the aggra-
vation of environmental quality in Morocco. Specifically,
the factors both stimulating and inhibiting Morocco’s energy
use-related CO2 emissions are anticipated to be unearthed.
Secondly, this study can reveal important policy implications
concerning the compliance of the Moroccan government with
its commitments made under the Paris Agreement and the
2030 SDG Agenda of the United Nations. Lastly, this study
can also be used to realize the importance of making a RE
transition within the energy sector of Morocco. It is believed
that Morocco has plentiful availability of untapped renewable
resources that can be utilized for renewable electricity genera-
tion purposes. Hence, the findings from this study can encour-
age investments for RE-related technology development to
significantly diversify Morocco’s national energy mix. In the
same vein, this study can be a blueprint for Morocco to reduce
its fossil fuel dependency and simultaneously ensure environ-
mental sustainability.
The contributions of this study to the environmental devel-
opment-related literature are threefold. Firstly, this study is one
of the very few studies that have evaluated the effects of RE
consumption on Morocco’s CO2 emission figures using time-
series models. The RE consumption-CO2 emissions nexus in
the context of Morocco has predominantly been explored using
panel datasets of African countries (Jebli and Youssef 2017a;
Khoshnevis Yazdi and Ghorchi Beygi 2018; Dauda et al. 2021).
However, although cross-country analysis has several benefits,
for adopting country-specific policies, it is necessary to con-
duct country-specific analysis by taking into consideration the
unique characteristics of the country of concern. Secondly, the
existing studies have mostly documented findings related to the
direct impacts of RE use on CO2 emissions (Kahia et al. 2019)
whereas not much is known regarding the indirect channels
through which RE consumption can affect CO2 emissions by
interacting with other key macroeconomic variables. Hence,
this study assesses both the direct and indirect environmental
effects associated with the use of RE from Morocco’s perspec-
tive. Lastly, drifting away from the conventional approaches,
this study controls for the structural break issues in the data
within the analysis. Since Morocco has experienced several
macroeconomic shocks between 1980 and 2017, structural
break problems can be expected. As a result, ignoring these
data-related issues can lead to biased empirical outcomes
whereby the findings reported can be doubted.
This study is structured as follows: the “Literature review”
section provides a summary of the previous relevant studies.
The “Methodology” section provides the methodology used
in selecting the empirical model, data, and the estimation
strategy. Then the key results derived from the analysis are
presented and discussed in the “Results and discussion” sec-
tion, while the “Conclusion and policy implications” section
provides the concluding remarks.
13

Literature review
This section chronologically reviews the previous studies
that have evaluated the impacts of RE use, economic growth,
financial development, and FDI inflows on CO2 emissions.
The summary of the findings from these existing studies
portrays the literature gaps that this current study aims to
bridge.
The literature on RE consumption and CO2
emissions
Although RE consumption has often been associated with
economic growth (Bouyghrissi et al. 2020), there is also
a strong consensus among researchers regarding the cru-
cial role of RE transition in reducing CO2 emissions (Al-
Mulali et al. 2015; Mendonca et al. 2020). These studies
have recommended the promotion of RE as an alternative
to fossil fuels for reducing CO2 emissions, mitigating cli-
mate change, and therefore, protecting the environmental
attributes. Over the last two decades, a large set of empirical
works has emerged to examine the link between RE con-
sumption and CO2 emissions for different countries across
the globe. Among the relevant country-specific studies, Dan-
ish et al. (2017) investigated the linkages between RE con-
sumption and CO2 emissions over 1970–2012 for the case
of Pakistan and found that greater use of RE has a signifi-
cant inhibitory impact on the nation’s CO2 emission levels.
Recently, Koondhar et al. (2021) employed the autoregres-
sive distributed lag (ARDL) model to estimate the short-
and long-run effects of RE consumption on China’s CO2
emission figures. The results unearthed that in the short-
run greater consumption of RE contributes to the lowering
of CO2 emissions in China. Besides, this finding was also
supported by the outcome of the causality analysis which
certified the presence of unidirectional causality running
from RE consumption to CO2 emissions. The CO2 emis-
sion-curbing impact of RE was also confirmed in the stud-
ies by Naz et al. (2019) for Pakistan, Sarkodie and Adams
(2018) for South Africa, and Bekhet and Othman (2018) for
Malaysia. In contrast, Pata (2018), Boontome et al. (2017),
and Luqman et al. (2019) remarked that RE use is not effi-
cient in reducing CO2 emissions in Turkey, Thailand, and
Pakistan, respectively.
On the other hand, among the existing panel data stud-
ies, Sharif et al. (2020) recently studied the associations
between RE use and CO2 emissions in the top-10 most-pol-
luted global countries between 1990 and 2017. The authors
concluded that there are bidirectional causalities between
RE consumption and environmental degradation in the form
of CO2 emissions. In the same vein, for selected Middle
Eastern and North African (MENA) countries including
13
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Environ Sci Pollut Res
Morocco, Kahia et al. (2019) concluded that RE energy use
is an effective means of curbing CO2 emissions. Besides,
Bilgili et al. (2016) utilized data of 17 countries that are
members of the Organization for Economic Cooperation
and Development (OECD) and remarked that RE consump-
tion and CO2 emissions are negatively correlated in the
long run; hence, the authors emphasized the importance of
boosting RE use for abating emissions of CO2. Conversely,
a few preceding panel data studies have also denied the
efficacy of boosting RE employment in respect of reduc-
ing CO2 emissions. Charfeddine and Kahia (2019) used
data of 24 MENA nations including Morocco and found
that the extent of RE transition that has taken place in these
countries is yet to reach the threshold level beyond which
this clean energy transition can effectively curb their CO2
emission figures. In another similar study on Morocco and
four other North African nations, Jebli and Youssef (2017b)
found evidence of RE consumption boosting CO2 emissions
in the long run but not in the short run. Parallel conclu-
sions in the context of a panel of 46 developing nations and
the BRICS1 countries were reported by Weimin et al. (2021)
and Chishti et al. (2021), respectively.
The literature on economic growth and CO2
emissions
Economic expansion is often accused to be associated
with emissions of CO2 (Wang and Zhang 2020; Wang and
Wang 2022). Contrarily, it is also acknowledged in the lit-
erature that greening the economic growth policies using
latest technology can decouple CO2 emissions from eco-
nomic growth (Wang and Zhang 2020; 2021). As per the
theoretical underpinnings of the Environmental Kuznets
Curve (EKC) hypothesis, economic growth can boost but
eventually curb CO2 emissions as a premature agriculture-
based economy transforms into a complex industrialized
one (Grossman and Krueger 1995; Apergis and Ozturk
2015; Ozturk and Al-Mulali 2015). The EKC hypothesis
is valid only in the context of the economic growth-CO2
emissions nexus depicting an inverted U-shaped relation-
ship (Gyamfi et al. 2020; Ajmi and Inglesi-Lotz 2020;
Alola and Ozturk 2021). Consequently, several studies have
attempted to verify the authenticity of this hypothesis using
both country-specific and cross-sectional methods (Wang
et al. 2022b; Apergis 2016; Ozcan et al. 2018). Among the
country-specific investigations of the EKC hypothesis for
CO2 emissions, ul Haq et al. (2016) concluded that for the
case of Morocco, the EKC hypothesis holds in the short
run but not in the long run. Besides, Ali et al. (2021) used
the ARDL model using data from Pakistan and found the
1
BRICS stands for Brazil, Russia, India, China, and South Africa.
Environ Sci Pollut Res
EKC hypothesis to be valid both in the short and long run.
Similar findings were reported by Bekun et al. (2020) and
Hasan et al. (2021) for Nigeria and Bangladesh, respectively.
In contrast, for the case of China, Pata and Caglar (2021)
recently employed the augmented ARDL technique and
found the economic growth-CO2 emission nexus to depict
a U-shaped association; thus, the EKC hypothesis was said
to not hold for China. Likewise, Koc and Bulus (2020), Ban-
dyopadhyay and Rej (2021), and Minlah and Zhang (2021)
also concluded that the CO2 emission-related EKC hypoth-
esis is invalid in the context of Korea, India, and Ghana,
respectively.
Among the related panel data studies, Yazdi and Beygi
(2018) found that the EKC hypothesis is supported for the
African countries and that there is bidirectional causality
between GDP and CO2 emissions. Similarly, Cheikh and
Zaied (2021) asserted that the EKC hypothesis is valid
for the cases of Morocco and 11 other MENA nations.
In another panel data study on selected African nations,
Mahmood et al. (2020) found evidence of the EKC hypoth-
esis being valid. On the other hand, in the context of selected
MENA countries including Morocco, Cheikh et al. (2021)
concluded that the EKC hypothesis does not hold. In the
context of selected South Asian countries, Murshed et al.
(2021a) and Murshed and Dao (2020) also verified the
authenticity of the CO2 emission-related EKC hypothesis.
Similarly, for the cases of five European countries, Balsalo-
bre-Lorente et al. (2021) documented statistical evidence to
validate the CO2 emission-related EKC hypothesis. There-
fore, it can be observed that the preceding studies have col-
lectively highlighted the ambiguity concerning the validity
of the EKC hypothesis for CO2 emissions.
The literature on financial development and CO2
emissions
A developing economy’s financial sector is referred to as one
of its major growth-driving sectors since a well-developed
financial sector is indicative of higher degrees of domestic
consumption and investment. Therefore, it can be claimed
that financial development contributes to economic growth
(De Gregorio and Guidotti 1995). However, the correspond-
ing impact of financial development on the environment is
acknowledged to be ambiguous (Ahmad et al. 2021; Ahmad
et al. 2021; Shahbaz et al. 2022). Arguably, financial devel-
opment is asserted to foster industrialization which, in turn,
results in the degradation of environmental quality (Ali
et al. 2019). Conversely, developing the financial sector
can also be a means of achieving green growth by financing
environmental technology development projects (Paramati
et al. 2017; Shahbaz et al. 2018). Therefore, considering the
equivocal environmental effects of financial development,
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many studies have explored this nexus using both time-series
and panel data estimators.
Within the corresponding country-specific literature on
the financial development-CO2 emission nexus, Pata (2018)
advocated that financial development inhibits environmental
well-being by stimulating CO2 emissions in Turkey. Using
the ARDL approach, Pata (2018) found that financial devel-
opment and CO2 emissions to be positively correlated both
in the short and long run. Similarly, in the case of Greece,
Işik et al. (2017) also employed the ARDL technique to con-
clude that financial development boosts the long-run CO2
emission figures. Xu et al. (2018) used both the ARDL and
vector error correction model (VECM) approaches in the
context of Saudi Arabia and unearthed that financial devel-
opment does not influence the short-run CO2 emission lev-
els, but it does boost the emissions in the long run. Besides,
bidirectional causal associations between the variables, both
in the short and long run, were also put forward in the study.
Likewise, Ali et al. (2019) also highlighted the adverse envi-
ronmental impacts of financial development in the Nigerian
context. Although most of these studies have advocated in
favor of financial development exerting environmentally
unfriendly consequences, Saud et al. (2019) claimed that
financial development helps to abate CO2 emissions in Ven-
ezuela. On the other hand, for the case of Morocco, Sekali
and Bouzahzah (2019) used the ARDL technique and con-
cluded that financial development does not explain the vari-
ations in the nation’s CO2 emission figures.
Among the existing cross-sectional studies, in the con-
text of 15 Asian economies, Anwar et al. (2021) recently
concluded that financial development axes environmental
well-being by triggering greater emissions of CO2. Simi-
larly, in another relevant study on 25 African nations includ-
ing Morocco, Yazdi and Beygi (2018) asserted that finan-
cial development boosts CO2 emissions in the long run.
Moreover, using data from selected developing and devel-
oped economies, Shoaib et al. (2020) opined that financial
development impairs environmental welfare by boosting
CO2 emissions irrespective of a country being developed
or developing. Conversely, Zaidi et al. (2019) used data from
selected Asia Pacific Economic Cooperation (APEC) coun-
tries and found evidence of financial development curbing
CO2 emissions in the long run. Similarly, for selected OECD
nations, Zafar et al. (2019) showed that financial develop-
ment helps to mitigate their long-run CO2 emission figures.
In contrast, considering data from Morocco and 23 other
MENA countries, Charfeddine and Kahia (2019) discovered
that financial development has limited power to explain the
variations in the level of CO2 emissions in these countries.
Saidi and Mbarek (2017) asserted that in the long run finan-
cial development improves environmental quality by abating
CO2 emissions in the context of 19 emerging economies
including Morocco. In a recent study on 88 developing
13

countries, Khan and Ozturk (2021) opined that financial
development induces both direct and indirect impacts on
environmental quality. The results indicated that financial
development directly contributes to inhibit CO2 emissions
while indirectly reducing CO2 emissions by minimizing the
adverse environmental effects associated with economic
growth, international trade, and FDI inflows. Moreover,
Zakaria and Bibi (2019) found evidence of financial devel-
opment aggravating environmental quality by stimulating
greater emissions of CO2 across South Asia.
The literature on FDI inflows and CO2 emissions
Globalization, in all forms, has been acknowledged in
the literature as an influencer of CO2 emissions (Chishti
et al. 2020; Murshed et al. 2021b). Accordingly, quantify-
ing financial globalization in terms of FDI inflows, sev-
eral studies have evaluated the FDI inflow-CO2 emissions
nexus in light of the pollution haven hypothesis (PPH).2
Among the country-specific studies on the PHH, Solarin
et al. (2017) employed the ARDL method and remarked
that the PHH hypothesis is valid in the case of Ghana
since FDI inflows were ascertained to boost CO2 emis-
sions in the long run. Similarly using the ARDL method
and accounting for the structural break issue, Sun et al.
(2017) also reported evidence of the PHH for CO2 emis-
sions holding in the context of China. Similar findings
were reported for Tunisia by Mahmood et al. (2019). Like-
wise, Bulut et al. (2021) also verified the authenticity of
the PHH by concluding that the FDI flowing into Turkey
are responsible for boosting the nation’s CO2 emission
figures. In contrast to the theoretical underpinnings of the
PHH, the pollution halo effect (PHE) hypothesis postulates
that FDI inflows induce technological innovations within
the host economy to curb CO2 emissions (Balsalobre-Lor-
ente et al. 2019). Accordingly, in the context of Turkey,
Mert and Caglar (2020) employed the ARDL and VECM
approaches and found the PHE hypothesis to be valid. In
another time-series analysis for the cases of Morocco and
Tunisia, Hakimi and Hamdi (2016) concluded that the FDI
flowing into these countries are unclean since higher FDI
inflows were found to be associated with greater emissions
of CO2.
Among the preceding cross-sectional studies on the
FDI inflow-CO2 emission nexus, Kahia et al. (2019) used
data of 12 MENA countries including Morocco and found
FDI inflows helping these nations curb their CO2 emission
2
The PHH postulates that FDI inflows degrade environmental qual-
ity in the host economies by triggering greater emissions of CO2. For
more information on the PHH, see Banerjee and Murshed (2020).
13
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Environ Sci Pollut Res
figures. Thus, the authors argued that the PHE hypothesis is
valid for these nations. Conversely, verifying the PHH for
the case of four African Mediterranean countries including
Morocco, Abdouli and Omri (2021) recently asserted that
FDI inflows boost CO2 emissions to aggravate the quality of
the environment. On the other hand, Shobande and Ogbei-
fun (2021) authenticated the PHE hypothesis in the context
of selected OECD nations. The results from the long-run
regression analysis revealed that positive shocks to the level
of FDI inflows contribute to the curbing of the CO2 emis-
sion figures of the OECD countries of concern. In another
study 10 global nations, Teng et al. (2021) found evidence
of higher FDI inflows mitigating CO2 emissions only in the
long run.
Methodology
This section chronologically presents the empirical models
(the “Empirical model specifications and data” section) and
the estimation strategy (the “Estimation strategy” section)
considered in this study.
Empirical model specifications and data
This study explores impacts of positive shocks to figures of
RE consumption, economic growth, financial development,
and FDI inflows on Morocco’s CO2 emission levels over
the period from 1980 to 2017. Following Adedoyin et al.
(2021a, 2021b) and Abbasi et al. (2021), this study consid-
ers a non-linear model specification which is in line with the
theoretical assumptions of the EKC hypothesis. The baseline
model in this regard can be expressed as:
LCO2t = β0 + β1 LRECt + β2 LGDPt + β3 LGDPSt
(1)
+ β4 FDt + β5 FDIt + εt
where the subscript t denotes the period (1980–2017) and
ε stands for the error term. The parameters βi (i = 1, 2, …, 5)
are the elasticity parameters to be predicted. The dependent
variable LCO2 is the natural logarithm of CO2 emissions
which are used to proxy the environmental impacts associ-
ated with positive shocks to the explanatory variables of
interest. The CO2 emission figures are measured in terms
of kilotons. The independent variable LREC refers to the
natural logarithm of the per capita RE consumption figures
of Morocco and is measured in terms of kilograms of oil
equivalent. The variables LGDP and LGDPS are the natu-
ral logarithms of the per capita real gross domestic product
(GDP) figures and the corresponding squared terms. These
per capita real GDP figures are used to proxy for the level
of economic growth in Morocco. For the EKC hypothesis
to be verified, the elasticity parameters β2and β3require to
Environ Sci Pollut Res
be positive and negative, respectively, and statistically sig-
nificant as well (Grossman and Krueger 1995). The variable
FD refers to the level of financial development in Morocco
which is measured in terms of the share of domestic credit
provided to the private sector by banks in the GDP of
Morocco. A larger (smaller) share in this regard is indicative
of a relatively more developed (underdeveloped) financial
sector. Lastly, the variable FDI stands for the share of FDI
inflows in the GDP of Morocco. The inclusion of this vari-
able is motivated by the desire to test the authenticity of the
CO2 emission-related PHH in the context of Morocco. If the
elasticity parameter β5 is statistically significant and positive,
then the PHH is valid; conversely, the negative sign and
statistical significance of the elasticity parameter β5 would
affirm the authenticity of the PHE hypothesis.
Although the baseline model (model 1) is expected to
predict the direct impacts of RE use on Morocco’s CO2
emission figures, this study is also interested to ascertain
the indirect effects of RE use by evaluating the interactive
impacts of this variable with other key macroeconomic vari-
ables. Hence, we augment the baseline models with interac-
tion terms as shown below:
LCO2t = β0 + β1 LRECt + β2 LGDPt + β3 LGDPSt + β4 FDt
( ) (2)
+ β5 FDIt + β6 LRECt ∗ FDt + εt
LCO2t = β0 + β1 LRECt + β2 LGDPt + β3 LGDPSt + β4 FDt
( ) (3)
+ β5 FDIt + β6 LRECt ∗ FDIt + εt
where the variables (LREC*FD) and (LREC*FDI) are
the interaction terms between RE consumption and financial
development and between RE consumption and FDI inflows,
respectively. The predicted signs, provided statistically sig-
nificant, of the elasticity parameter β6 would portray the
joint impacts of RE use and financial development and FDI
inflows on Morocco’s CO2 emissions levels. The data for
RE consumption is sourced from the US Energy Information
Administration database. The data for the other variables are
compiled from the World Development Indicators database
of the World Bank3.
Estimation strategy
The estimation strategy followed in this study is classi-
fied into multiple stages. Firstly, the structural break issue
is diagnosed within the unit root analysis. Secondly, the
structural break problems are further assessed within the
cointegration analysis. Lastly, the regression analysis is
conducted.
3 4
To ensure brevity, the descriptive statistics of the variables and the
corresponding correlation matrix are not reported. However, these
tables can be made available upon request.
Content courtesy of Springer Nature, terms of use apply. Rights reserved.
Unit root and cointegration analysis
The presence of a structural break in the data, if left
unattended, compromises the accuracy of the unit root
and cointegration outcomes. Accordingly, the second
generation time-series estimators are used in this study
since the first-generation unit root and cointegration test-
ing methods assume that there are no structural break
problems in the data. To predict the unit root proper-
ties, we follow Mehmood (2021) and utilize the Zivot
and Andrews (2002) method. This method allows for one
structural break in the data for each variable and pre-
dicts test statistics under the null hypothesis of no unit
root issues. This analysis is followed by the cointegra-
tion analysis which is conducted to ascertain the long-
run relationships between the variables of concern. In
this regard, this study employs two alternative methods
to predict the cointegrating properties both in the absence
and presence of structural breaks in the data. At first, the
ARDL bounds testing approach of Pesaran et al. (2001)
is employed which does not take into account the issue of
structural breaks. In this method, a F statistic is estimated
under the null hypothesis of non-cointegration among the
variables in the respective model. Then the Maki (2012)
cointegration analysis is conducted to predict the cointe-
grating properties by accounting for multiple unknown
structural breaks in the data 4 . Similar to the ARDL
bound testing technique, the Maki (2012) method also
predicts test statistics under the null hypothesis of non-
cointegration. Both these methods have been employed in
several of the latest studies documented within the CO2
emissions-induced literature (Zhang et al. 2021; Beşe
and Kalayci 2021). Once the outcomes of the unit root
and cointegration analyses are ascertained, the regression
analysis is conducted.
Regression analysis
Following Koondhar et al. (2021), we utilized the ARDL
technique proposed by Pesaran and Smith (1995) and
Pesaran et al. (2001) to predict the short- and long-run
elasticities of CO2 emissions in the context of Morocco.
This technique has several advantageous features which
best fits the nature of the dataset employed in this study.
Among these, the ARDL method is particularly effi-
cient in handling issues related to small sample size bias
(Odhiambo 2009). Besides, the issues of serial correla-
tions and endogenous covariates within the model are
Although the Maki (2012) approach can identify up to five struc-
tural breaks in the data, we limit it to two considering the short length
of the period used in this study.
13
 Environ Sci Pollut Res

Table 1  The Zivot and Andrews Variable t-statistic Break Variable t-statistic Break Integra-
(2002) unit root results tion
order

LCO2 − 1.680 1990 ∆LCO2 − 4.850*** 1991 I(1)

LREC − 4.150*** 2002 ∆LREC - - I(0)
LGDP/LGDPS − 2.110 2000 ∆LGDP/∆LGDPS − 4.505*** 2000 I(1)
LFD − 3.102 1992 ∆LFD − 6.340*** 1992 I(1)
LFDI − 2.450 1998 ∆LFDI − 5.120*** 2000 I(1)

The Schwarz information criterion (SIC) is used for selecting optimal lags; ∆, I(0), and I(1) denote the
first difference operator, level, and first difference, respectively; *** denotes statistical significance at 1%
significance level

accommodated within this method by using flexible lags Table 2  The ARDL bound test results
for each of the variables in the respective model (Malik
Model F-stat. Critical value Lower bound Upper bound
et al. 2020). In addition, the ARDL technique does not
prerequisite all variables to have a common order of 1 5.240*** 1% 3.29 4.37
integration; rather, it allows for mixed integration orders 2 4.850*** 5% 2.56 3.49
among the variables either at level or at the first differ- 3 4.990*** 10% 2.20 3.09
ence, but not at the second difference (Ahmad and Du
The SIC is used for selecting optimal lags; *** denotes statistical sig-
2017). Lastly, it can produce both the short- and long-run nificance at 1% significance level.
outcomes, whereas the conventionally used methods such
as the fully modified ordinary least squares (FMOLS)
regression method of Phillips and Hansen (1990). In
the context of our baseline model (model 1), the ARDL Table 3  The Maki (2012) cointegration results
model can be specified as: Model t-stat. Critical value (5%) Break 1 Break 2
ΔLCO2t = β0 + β1 LCO2t−1 + β2 LRECt−1 + β3 LGDPt−1 + β4 LGDPSt−1 + β5 FDt−1
1 − 9.700** − 7.600 1990 2010
m
2 − 9.760** − 7.630 1991 2010
∑
+ β6 FDIt−1 + α1a ΔLCO2t−a
a=1
3 − 8.450** − 7.610 1991 2011
+
n
∑
α2b ΔLRECt−b +
o
∑
α3c ΔLGDPt−c +
p
∑
α4d ΔLGDPSt−d
(4)
b=0 c=0 d=0 The t-statistics are predicted considering the structural breaks in the
q
∑ r
∑ trends and regime shifts; the SIC is used for selecting optimal lags;
+ α5e ΔFDt−e + α6f ΔFDIt−f + θt
e=0 f=0
** denotes statistical significance at 5% significance level.

where ∆ stands for the first difference operator. From

Equation (4), the short-run elasticities of CO2 emissions
are predicted from the model given below:
Once the elasticities are predicted, it is pertinent to run
some diagnostic tests. In this regard, the Breusch-Godfrey
m
∑ n
∑
ΔLCO2t = 𝛼0 + α1a ΔLCO2t−a + α2b ΔLRECt−b
a=1 b=0 Lagrange Multiplier (χ2 LM) test is performed to explore
o p
the serial correlation problems in the model. Then, to check
(5)
∑ ∑
+ α3c ΔLGDPt−c + α4d ΔLGDPSt−d
c=0 d=0
whether the residuals are normally distributed or not, the
∑q r
∑ Jarque-Bera test (χ2 NORMALITY) is conducted. Besides,
+ α5e ΔFDt−e + α6f ΔFDIt−f + ∅ECTt−1 + 𝜀t the heteroscedasticity issues are diagnosed using the autore-
e=0 f=0
gressive conditional heteroskedasticity (ARCH) effects
where ­ECTt-1 refers to the one-period lagged error correc- analysis (χ2 ARCH). Furthermore, the model misspecifi-
tion term (ECT); the ECT provides the rate at which any dis- cation concerns are addressed using the Ramsey RESET (χ2
tortion from the long-run equilibrium in the current period RESET) test. Lastly, the stability of the elasticity parameters
is restored in the next period which is estimated using the is examined through the cumulative sum (CUSUM) and the
residuals of the long-run equation. From Equation (4), the cumulative sum of squares (CUSUMSQ) tests.
long-run equation can be derived and expressed as: Furthermore, the robustness of the long-run elasticity out-
comes, across alternative regression methods, is assessed
LCO2t = β0 + β1 LRECt + β2 LGDPt + β3 LGDPSt
(6) using the FMOLS technique introduced by Phillips and
+ β4 FDt + β5 FDIt + σt Hansen (1990).

13

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Environ Sci Pollut Res

Table 4  The short- and long-run elasticities from the ARDL analysis Results and discussions
Dependent variable: LCO2
This section begins by reporting the results obtained from
Model 1 Model 2 Model 3
Regressors Coefficient Coefficient Coefficient
the Zivot and Andrews (2002) unit root analysis. The cor-
Short-run results responding findings, as shown in Table 1, reveal that all
LREC 0.039** 0.049*** − 0.029** the variables (LCO2, LGDP/LGDPS, FD, and FDI) are
(0.021) (0.015) (0.016) integrated at the first difference [I(1)] while the variable
LGDP 1.715 1.149 1.237 LREC is integrated at level [I(0)]. Therefore, it can be said
(1.047) (1.217) (1.104) that there is a mixed order of integration among the vari-
LGDPS − 0.131 − 0.154 − 0.093
ables. Besides, the location for the structural break for the
(0.473) (0.485) (0.477)
FD 0.312*** 0.231*** 0.217***
respective variable is also identified.
(0.124) (0.029) (0.027) The unit root analysis is followed by the cointegration
FDI 0.119 0.059 0.081 analysis. The estimated F-statistics from the ARDL bound
(0.084) (0.051) (0.079) test for all three models, as shown in Table 2, are wit-
REC*FD - − 0.056 - nessed to be above the lower and upper critical bounds.
(0.072) Hence, the null hypothesis of non-cointegration is rejected
REC*FDI - - 0.042
at 1% significance level. Thus, it can be said that there
(0.048)
are long-run associations between Morocco’s CO2 emis-
D(Break 1) 1.240*** 1.410*** 1.441***
(0.350) (0.220) (0.212)
sions, per capita RE consumption, per capita economic
D(Break 2) − 1.098** − 1.212** − 1.120** growth, financial development, and FDI inflow figures.
(0.510) (0.611) (0.580) Table 3 reports the results from the Maki (2012) cointe-
ECTt-1 − 0.777*** − 0.724*** − 0.760*** gration analysis. It is evidenced that for all three models
(0.116) (0.231) (0.122) the predicted t-statistic is statistically significant at 5%
Constant − 6.573 − 2.434 0.356
significance level. Thus, once again, it can be claimed that
(5.745) (2.867) (7.523)
there are long-run cointegrating relationships between the
Long-run results
LREC 0.444*** 0.640*** 0.686***
variables of concern. Moreover, the Maki (2012) analysis
(0.147) (0.159) (0.130) also provides the locations of the two structural breaks for
LGDP 5.135** 2.439*** 2.662*** the respective model. These identified break years are used
(1.957) (1.022) (0.860) to create structural break dummy variables that are used
LGDPS − 0.312*** − 0.090** − 0.081** to augment the corresponding model for controlling for
(0.057) (0.044) (0.039)
the structural break issues within the regression analysis.
FD 0.400** 0.336*** 0.333***
Table 4 displays the short- and long-run elasticities of
(0.218) (0.048) (0.021)
FDI 0.069*** 0.042** 0.035**
Morocco’s CO2 emissions in respect of changes to the
(0.017) (0.022) (0.018) nation’s RE consumption, economic growth, financial
REC*FD - − 0.095*** - development, and FDI inflow figures. Overall, the pre-
(0.011) dicted signs of the elasticity parameters are homogenous
REC*FDI - - − 0.140** across all three model specifications considered in this
(0.065)
study. The elasticity estimates show that consuming RE is
D(Break 1) 1.195** 2.450*** 2.110***
efficient in mitigating Morocco’s CO2 emissions figures
(0.560) (0.765) (0.611)
D(Break 2) − 1.200*** − 1.400*** − 1.540**
both in the short and long run. A 1% rise in the amount of
(0.360) (0.510) (0.725) RE consumed per person is predicted to reduce CO2 emis-
Adjusted R2 0.740 0.746 0.767 sions by 0.03–0.05% in the short run and by 0.44–0.69%
Diagnostics in the long run. Hence, it is evident that, compared to the
χ2 ARCH 0.466 0.410 0.440 short run, the marginal CO2 emission-inhibiting effects
χ2 RESET 0.630 0.590 0.610 associated with RE energy use are relatively larger in the
χ2 NORMALITY 3.465 3.800 3.720
long run. This implies that a persistent increase in the
χ2 LM 1.450 1.520 1.555
level of per capita RE consumption is likely to monotoni-
D(Break 1) and D(Break 2) are the two structural break year dummy cally abate emissions of CO2 in Morocco. It is a reason-
variables as per the identified breaks from the Maki (2012) cointegra- able finding from the perspective that renewable energy
tion analysis; the standard errors are reported within the parentheses;
resources are free of hydrocarbon; consequently, combus-
***, **, and * denote statistical significance at 1%, 5%, and 10% sig-
nificance level, respectively. tion of these clean energy sources does not release CO2
into the atmosphere. Besides, enhancing RE use can also

13

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be an indication of simultaneously curbing fossil fuel con-
sumption provided the share of renewables in the total
final energy consumption figures is increased. In this
regard, a reduction in fossil fuel dependency could justifi-
ably be responsible for improving environmental quality in
Morocco. This finding is consistent with those reported in
the preceding studies by Danish et al. (2017) and Koond-
har et al. (2021) for Pakistan and China, respectively.
Among the other key findings from the ARDL analysis, it
can be witnessed that the EKC hypothesis holds for Morocco
but only in the long run. The positive and negative signs
of the statistically significant predicted long-run elasticity
parameters associated with LGDP and LGDPS, respec-
tively, implicate that the economic growth-CO2 emission
nexus exhibits an inverted U-shaped relationship. This find-
ing is consistent with that reported by Bekun et al. (2020)
for Nigeria, Ali et al. (2021) for Pakistan, and Hasan et al.
(2021) for Bangladesh. The validation of the EKC hypoth-
esis implicates that if Morocco can achieve persistent growth
of its economy, the nation is likely to attain and surpass the
threshold economic growth level necessary for abating CO2
emissions to achieve green growth. Besides, the elasticity
estimates also reveal that financial development is detrimen-
tal to Morocco’s environmental well-being, both in the short
and long run. The positive signs and statistical significance
of the associated elasticity parameters affirm this claim. A
1% rise in the share of credit extended to the private sector
by banks in the GDP is found to boost CO2 emissions on
average by 0.22–0.31% in the short run and by 0.33–0.444%
in the long run, ceteris paribus. Therefore, these findings
implicate two major concerns for the government. Firstly,
the relatively larger adverse environmental effects in the long
run imply that without greening the financial sector, it may
not be possible for Morocco to safeguard its environmental
attributes. Secondly, it can also be assumed that the finan-
cial sector has conventionally been financing environmen-
tally unfriendly consumption and production initiatives in
Morocco; consequently, financial development is associated
with the persistent aggravation of the nation’s CO2 emission
figures. These findings corroborate those of Pata (2018) for
Turkey. However, these findings are inconsistent with the
conclusions put forward by Sekali and Bouzahzah (2019)
for the case of Morocco; the contrasting findings could be
because the study by Sekali and Bouzahzah (2019) did not
control for the structural breaks in the data5.
Furthermore, the elasticity estimates also verify the PHH
in the context of Morocco only in the long run. The find-
ings portray that a 1% rise in the share of FDI inflows in the
5 sions in Morocco highlight the relevance of scrutinizing
It is to be noted that the coefficients corresponding to the structural
break dummy variables are found to be statistically significant. Thus,
the relevance of controlling for structural break issues is justified.
13
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Environ Sci Pollut Res
GDP is associated with a surge in Morocco’s long-run CO2
emission figures on average by 0.04–0.07%, ceteris paribus.
Hence, it can be presumed that Morocco has traditionally
attracted unclean FDI that may have triggered fossil fuel use
to boost the energy use-related CO2 emissions. As a result,
the financial globalization policies pursued in Morocco are
not aligned with the nation’s local and international com-
mitments concerning the abatement of greenhouse gas emis-
sions for improving environmental well-being. The finding
of the positive correlation between FDI inflows and CO2
emissions is parallel to those documented in the studies by
Solarin et al. (2017) for Ghana and Sun et al. (2017) for
China. In summary, the aforementioned findings highlight
that RE consumption directly contributes to curb Moroc-
co’s CO2 emission figures, the EKC hypothesis holds, and
financial development, and FDI inflows stimulate CO2 emis-
sions. However, this study also unearths some major findings
related to the interactive (indirect) environmental impacts
associated with RE use.
Comparing between the elasticity estimates from model
1 and models 2 and 3, it is evident that controlling for the
interactive impacts of RE consumption with financial devel-
opment and FDI inflows reduces the marginal detrimental
impacts of financial development and FDI inflows. This
claim is certified by the negative sign and the statistical
significance of the long-run elasticity parameters attached
to the interaction terms. These imply that RE consumption
and financial development jointly reduce the CO2 emission
figures of Morocco. Therefore, it can be said that if private
finances are utilized for boosting RE consumption within
the Moroccan economy, the negative environmental impacts
associated with financial development can be controlled to a
large extent. Similarly, RE consumption can also be hypoth-
esized to reduce the adverse environmental implications of
Morocco’s financial globalization initiatives. In line with
this finding, it can be asserted that if Morocco can attract
clean FDI which can be utilized for the development of
the nation’s RE sector, the financial globalization-induced
CO2 emissions can be abated. Furthermore, the elastic-
ity estimates also reveal that controlling for the interac-
tive impacts reduces the economic growth-environmental
degradation trade-off in Morocco. This is evident from the
finding that the predicted long-run elasticity parameters
attached to LGDP are comparatively larger in the context
of model 1 relative to those in the context of models 2 and
3. Hence, it can also be asserted that producing the national
output by employing RE resources is likely to mitigate the
environmental impacts associated with the growth of the
Moroccan economy. Consequently, these findings regarding
the interactive effects of RE consumption on CO2 emis-
the mediating roles of key macroeconomic variables for
comprehensive policy-making purposes.
Environ Sci Pollut Res

Furthermore, the findings reported in Table 4 show that
the ECTs for all three models are negative and statisti-
cally significant as well. Therefore, it can be said that any
distortion from the long-run equilibrium in the current
period is adjusted at a rate of around 72–78% in the next
period. Besides, the high values of the adjusted R-squared
values imply a good fit for all three ARDL models. The
adjusted R-squared values indicated that almost 74–78% of
the total variations in Morocco’s CO2 emission figures can
be explained by the shocks to the nation’s per capita RE
consumption, per capita economic growth, financial devel-
opment, and FDI inflow levels. Furthermore, the findings
from the diagnostic tests, as reported in Table 4, reveal
that all three models are free from heteroscedasticity,
serial correlation, non-normality, and model misspecifica-
tion problems. In addition, the stability of the parameters
for the respective models is also ensured from the CUSUM
and CUSUMSQ plots shown in Figure 2.

CUSUM plot (Model 1) CSUMSQ plot (Model 1)

20 1.5

10 1

0 .5

-10 0

-20 -.5
1980 1990 2000 2010 2020 1980 1990 2000 2010 2020
Year Year

CUSUM plot (Model 2) CUSUMSQ plot (Model 2)

20 1.5

10 1

0 .5

-10 0

-20 -.5
1980 1990 2000 2010 2020 1980 1990 2000 2010 2020
Year Year

CUSUM plot (Model 3) CUSUMSQ plot (Model 3)

20 1.5

10 1

0 .5

-10 0

-20 -.5
1980 1990 2000 2010 2020 1980 1990 2000 2010 2020
Year Year

Fig. 2  The CUSUM and CUSUMSQ plots for models 1, 2, and 3. Note: The stability of the parameters for the respective model is ensured if the
plot line is within the 95% confidence interval

13

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 Environ Sci Pollut Res

Table 5  The robustness analysis using FMOLS estimator it is deemed necessary for Morocco to diversify its energy
Dependent variable: LCO2
mix by augmenting renewable resources into its energy sector;
especially, for generating power. Therefore, to understand the
Model 1 Model 2 Model 3
importance of promoting RE use for achieving environmen-
Regressors Coefficient Coefficient Coefficient tal sustainability, it is pertinent for policymakers to have an
LREC − 0.130*** − 1.009*** − 1.309*** understanding of the effects of RE consumption on environ-
(0.046) (0.107) (0.192) mental attributes. Against this background, this study scruti-
LGDP 3.813*** 2.129** 2.558* nizes the RE consumption-CO2 emission nexus, controlling
(1.474) (0.992) (1.434) for economic growth, financial development, and FDI inflows,
LGDPS − 0.171* 0.099*** − 0.091*** in the context of Morocco over the 1980–2017 period. The
(0.096) (0.012) (0.009) major novelty of this study is highlighted in the sense that
FD 0.438*** 0.344*** 0.359*** it not only evaluates the direct impacts of RE use on CO2
(0.100) (0.119) (0.115) emissions but also emphasizes the indirect effects. Besides,
FDI 0.015*** 0.012*** 0.322** the econometric methods utilized are robust to accounting
(0.005) (0.003) (0.142) for structural break concerns in the data. Overall, the findings
REC*FD − 0.090*** revealed that RE use directly helps to abate CO2 emissions
(0.0124) both in the short and long run, while financial development
REC*FDI − 0.174*** and FDI inflows boost the emissions. However, the adverse
(0.0341) environmental impacts of financial development and FDI
D(Break 1) 1.231*** 2.112*** 2.331*** inflows are evidence to be partially neutralized by facilitat-
(0.160) (0.125) (0.245) ing greater use of RE in the long run. These results implied
D(Break 2) − 1.500*** − 1.505*** − 1.660*** that RE consumption can both directly and indirectly, via the
(0.321) (0.210) (0.472) channels of financial development and FDI inflows, contribute
Constant − 9.468* − 4.251 5.258 to CO2 emission reductions in Morocco. Besides, the EKC
(5.580) (3.544) (5.324) hypothesis is also found to hold.
R-squared 0.863 0.888 0.877 In line with these findings, several viable policies can
be recommended to the Moroccan government. Firstly, it
The standard errors are reported within the parentheses; ***, **, and
is important for Morocco to boost the level of RE use and
* denote statistical significance at 1%, 5%, and 10% significance lev-
els, respectively. simultaneously reduce fossil fuel consumption. In this regard,
the nation has to overcome the associate constraints that have
inhibited RE transition in Morocco. Besides, the government
For the robustness check of the long-run elasticity is recommended to impose higher tariffs on petroleum imports
parameters, the FMOLS estimator is employed to re- and rather make use of the untapped indigenous renewable
estimate all three models. The long-run elasticity param- sources for generating power, in particular. The government
eters derived from the FMOLS analysis are reported in should also incentivize research and development investments
Table 5. It can be witnessed that, despite differing in for developing the local RE technologies. Secondly, the eco-
terms of magnitude, the predicted signs of the FMOLS nomic growth strategies need alterations whereby green initia-
elasticity parameters are parallel to the correspond- tives should be introduced to facilitate sustainable consump-
ing long-run elasticity parameters estimated using the tion and production practices within the country. Once again,
ARDL technique. As a result, we can claim our findings for achieving green economic growth, the government should
to be robust across alternative regression methods. encourage the employment of RE resources within the indus-
try, residential buildings, and other key sectors. Thirdly, the
financial sector of Morocco also needs major transformations
Conclusion and policy implications whereby the access to concessional loans for green projects
has to be substantially increased. In this regard, the govern-
Morocco has always been committed to reducing its CO2 ment can introduce green bonds which can effectively help
emission figures in compliance with environmental welfare- to reduce the adverse environmental impacts associated with
enhancing targets mentioned under the Paris Agreement and financial development. Finally, the government should restrict
the SDG agenda of the United Nations. However, the nation the inflow of unclean FDI into Morocco. Instead, it is more
has not managed to abate its CO2 emissions particularly due relevant for the government to attract RE development-related
to the traditional reliance of the nation on fossil fuels. Con- FDI which can be expected to relieve the technological and
sequently, Morocco has been one of the major importers of financial barriers that have traditionally inhibited RE transi-
petroleum across the globe. Hence, under such circumstances, tion in Morocco.

13

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Environ Sci Pollut Res
Due to the unavailability of data, the period of analysis
had to be limited from 1980 to 2017. In the same vein,
data unavailability also restricted our choice of control
variables. As far as the future research directions are
concerned, this study can be extended by assessing the
asymmetric impacts of positive and negative shocks to
RE use on Morocco’s CO2 emission figures. Besides, the
causal relationships between the variables can also be
scrutinized. Moreover, for more comprehensive and robust
policy-making purposes, the environmental impacts of dif-
ferent types of RE (especially hydro, solar, and wind) in
the context of Morocco can be evaluated.
Data availability The datasets used during the current study are avail-
able from the corresponding author on reasonable request.
Authors contribution SB conceptualized, conducted the economet-
ric analysis, and wrote the introduction. MM conceptualized, wrote
the original draft, conducted the econometric analysis, highlighted
the policy implications, and supervised the work. AJ conducted the
literature review and reviewed the draft. AM analyzed the findings
and conducted the literature review. HM wrote the introduction and
concluding remarks. MK wrote the original draft and compiled the
overall manuscript.
Declarations
Ethics approval Not applicable
Consent to participate Not applicable
Consent for publication Not applicable
Competing interests The authors declare no competing interests.
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