Socio-Economic Challenges of Renewable Energy and Low-Carbon Structural Transformation in Sub-Saharan Africa: Sectoral and Regional Evidence

Low-carbon structural transformation has become one of the major socio-economic challenges in Sub-Saharan Africa, as countries seek to sustain economic growth, expand energy access, support industrial development and reduce carbon emissions. Although renewable energy is widely recognised as a pathway towards sustainable development, limited empirical evidence exists on whether it moderates the environmental consequences of structural transformation across sectors and regions. This study examines how renewable energy influences the relationship between structural transformation and carbon dioxide emissions using annual panel data for 42 Sub-Saharan African countries covering the period 1990–2023. The analysis is based on the extended Stochastic Impacts by Regression on Population, Affluence and Technology (STIRPAT) framework and employs Im-Pesaran-Shin panel unit-root tests, Pedroni cointegration analysis, Fully Modified Ordinary Least Squares (FMOLS), Dynamic Ordinary Least Squares (DOLS), interaction models, and two-step System Generalised Method of Moments (System GMM) estimation to examine long-run relationships and assess the robustness of the findings. The results show that renewable energy significantly reduces carbon emissions, with estimated coefficients of –1.460 in the FMOLS model and –0.631 in the DOLS model. The income results indicate a negative non-linear relationship between income and emissions. The FMOLS estimates show the expected Environmental Kuznets Curve signs, but the calculated turning point lies below the observed income range, while the DOLS evidence is weaker because the linear income term is not statistically significant. The interaction analysis shows that renewable energy significantly weakens the carbon intensity of industrial transformation in the FMOLS model, with an interaction coefficient of –7.094, while the corresponding DOLS coefficient of –1.205 is negative but not statistically significant. Renewable energy also strengthens the environmental benefits of service-sector expansion, with interaction coefficients of –1.014 in the FMOLS model and –0.614 in the DOLS model. Regional estimates further show that renewable-energy-induced decoupling effects are stronger in Southern and Eastern Africa than in Central Africa. The findings highlight the importance of integrating renewable energy into sectoral transformation strategies and provide evidence for designing region-specific policies that address the socio-economic challenges of growth, energy access, industrial development, regional inequality, climate resilience and environmental sustainability across Sub-Saharan Africa.