What drives the energy consumption mix in Nigeria? The role of financial development, population age groups, urbanization and international trade: insight from ARDL Analysis.

This study aims to investigate the influence and the direct causal relationship between energy consumption and the selected explanatory variables in the Nigerian economic system. Using ARDL‐VECM over the period of 1972–2014, the results are that financial development exerts negative and significant influence on energy consumption. Trade openness and urbanisation exert positive and significant effect on energy consumption both in the short and long run, the active age (15–64) and old age (65 and >) have different effects on energy consumption. Although the number of the older population (age 65 and above) causes the energy consumption level to fall, the size of the working/active population (age 15–64) causes the energy consumption level to increase. Further results revealed (i) unidirectional causality runs from working population to energy consumption, (ii) uni‐directional causality runs from energy consumption to credit to private sector, (iii) uni‐directional from trade openness to real GDP per capita, (iv) bi‐directional causal relationship is observed between urbanisation and energy consumption, (v) bi‐directional relationship between trade openness and energy consumption. These findings may be a guide to policymakers in evaluating Nigerian economy's energy needs and effective energy policies needed to address environmental issues related to fossil fuel use. [ABSTRACT FROM AUTHOR]