Drivers of CO2-Emissions in Fossil Fuel Abundant Settings: (Pooled) Mean Group and Nonparametric Panel Analyses

Elkhan Richard Sadik-Zada,Wilhelm Loewenstein

doi:10.3390/en13153956

Abstract

The present inquiry addresses the income-environment relationship in oil-producing countries and scrutinizes the further drivers of atmospheric pollution in the respective settings. The existing literature that tests the environmental Kuznets curve hypothesis within the framework of the black-box approaches provides only a bird’s-eye perspective on the long-run income-environment relationship. The aspiration behind this study is making the first step toward the disentanglement of the sources of carbon dioxide emissions, which could be employed in the pollution mitigation policies of this group of countries. Based on the combination of two strands of literature, the environmental Kuznets curve conjecture and the resource curse, the paper at hand proposes an augmented theoretical framework of this inquiry. To approach the research questions empirically, the study employs advanced panel cointegration techniques. To avoid econometric misspecification, the study also employs for the first time a nonparametric time-varying coefficient panel data estimator with fixed effects (NPFE) for the dataset of 37 oil-producing countries in the time interval spanning between 1989 and 2019. The empirical analysis identifies the level of per capita income, the magnitude of oil rents, the share of fossil fuel-based electricity generation in the energy mix, and the share of the manufacturing sector in GDP as essential drivers of carbon dioxide emissions in the oil-rich countries. Tertiarization, on the contrary, leads to a substantial reduction of emissions. Another striking result of this study is that level of political rights and civil liberties are negatively associated with per capita carbon emissions in this group of countries. Furthermore, the study decisively rejects an inverted U-shaped income-emission relationship and validates the monotonically or exponentially increasing impact of average income on carbon dioxide emissions.

Highlights

IntroductionOil-producing countries account for more than 30 percent of global greenhouse gas (GHG)
Oil-producing countries account for more than 30 percent of global greenhouse gas (GHG)emissions [1]
We find that the increasing level of per capita income led over the years between 1989 and 2014 to greater per capita carbon dioxide emissions

Summary

Introduction

Oil-producing countries account for more than 30 percent of global greenhouse gas (GHG). Countries such as Russia, Iran, Saudi Arabia, Mexico, and Indonesia belong to the top Energies 2020, 13, 3956; doi:10.3390/en13153956 www.mdpi.com/journal/energies. 20 countries with the largest aggregate carbon dioxide (CO2 ) emissions worldwide [2]. Russia, Iran, Mexico, Canada, and Brazil belong to the list of the 20 countries with the largest per capita carbon emissions. The rest of the top carbon-emitting countries, both in cumulative and in per capita terms, are high income and high-middle income economies [3]. The potential losses due to the global energy transition due to the consequent reduction of the demand for oil and gas contribute to the obstruction of the deployment of carbon-saving technologies both within these countries and partly abroad over the investment activity of the sovereign wealth funds of the oil-rich countries

Methods

Results

Conclusion