Examining the effect of global energy reserves to production ratio on carbon emission in the USA

Abstract

A salient perspective to the global net zero emission aspiration that has yet received sparse attention is the unabating conventional energy reserves to production ratio. Considering the both the energy and energy-related emission profiles of the United States, this study considers the outlook of the country's carbon neutral 2050 with reference to the coal, natural gas, and oil energy reserves to production ratios for the period 1970 to 2040. The investigation implied a number of relevant results after employing the Markov switching, cointegration, and causality approaches. The result revealed that both oil and natural gas reserves to production ratio on global scale exert a significantly and positive influence on emission of carbon dioxide in the USA while coal has negative significant effect on carbon dioxide (CO2) emission in two different regimes. From the Wavelet coherence, both in phase and anti-phase relationship, CO2 and oil reserves-production ratio display strong interdependence while a mixed result in the short run (in phase) and medium run (anti phase) is established for CO2 and coal reserves-production ratio. In both short and medium run, natural gas reserves-production ratio leads CO2, and the reverse is also true. Additionally, from the frequency domain causality result, we found causality from oil reserves-production ratio to CO2 while there is bidirectional causality between CO2 and gas reserves-production ratio. The relevance of this study is that it offers insight into the seriousness of the carbon global goal amidst the dimension of energy reserves and production.