Energy consumption, carbon emissions and economic growth in Saudi Arabia: An aggregate and disaggregate analysis

Abstract

The objective of this study is to examine the relationship among economic growth, carbon emissions and energy consumption at the aggregate and disaggregate levels. For the aggregate energy consumption model, we use total energy consumption per capita and CO2 emissions per capita based on the total energy consumption. For the disaggregate analysis, we used oil, gas and electricity consumption models along with their respective CO2 emissions. The long-term income elasticities of carbon emissions in three of the four models are positive and higher than their estimated short-term income elasticities. These results suggest that carbon emissions increase with the increase in per capita income which supports the belief that there is a monotonically increasing relationship between per capita carbon emissions and per capita income for the aggregate model and for the oil and electricity consumption models. The long- and short-term income elasticities of carbon emissions are negative for the gas consumption model. This result indicates that if the Saudi Arabian economy switched from oil to gas consumption, then an increase in per capita income would reduce carbon emissions. The results also suggest that electricity is less polluting than other sources of energy.