Abstract
Recently, sustainable economic growth has taken the front line of the global development agenda. The common dependency on fossil fuel energy, greenhouse gas (GHG) emissions and the continuous rising demands for energy have posed challenges that put the world in a climate change trap. This work empirically analyzes the effect of innovation, oil price, oil price volatility and economic growth on GHG emissions over the period of 1991–2015. The study compares the emission level between European Union countries (EU) (26), oil-producing countries (22), China and the United States of America (USA) using the Driscoll–Kraay model. The main empirical finding points to a positive effect of innovation on GHG emission reduction initiatives in oil-importing economies. Particularly, EU countries significantly minimized emissions due to innovation, followed by China and the USA. Contrarily, the effect of innovation increases GHG emission in oil-exporting economies. The results also indicate broader significant effects of oil price and oil price volatility on GHG emission. Interestingly, the effect of oil price on GHG emission is asymmetrical between oil-exporting and -importing economies. Oil price increases in oil-importing countries decrease GHG emission; contrarily, its effect increases emissions in oil-exporting countries. Thus, oil-exporting countries lack motivation to decrease emission levels due to oil price escalation. Unlike the oil price, oil price volatility comparably decreases GHG emissions in oil-exporting and -importing economies. Thus, one might be tempted to take oil price volatility and the future uncertainty of oil price as a virtuous instance rather than oil price increment. Thus, policymakers need to pay attention to market forces and policy measures to monitor GHG emissions due to economic activities. The results are also robust under the alternative econometrics estimation model of generalized method of moments (GMM)-Differenced.
Highlights
In the 1970s, the world witnessed significant global phenomenal shifts with relatively prolonged effects
The purpose of this paper is to investigate whether oil price and oil price volatility play a vital role in reducing greenhouse gas (GHG) emissions in oil-importing and oil-exporting countries
The study included 22 oil-exporting countries of the world and 26 European Union countries, the United States of America and China to analyze the effects of oil price, oil price volatility, economic growth and innovation on the global GHG emission
Summary
In the 1970s, the world witnessed significant global phenomenal shifts with relatively prolonged effects. Identified increasing fossil fuel rents to have a significant negative effect on innovation in renewable energies This and other numerous factors may inter-play differently across countries to nullify the expected impacts of R&D or may adversely exacerbate. The study hypothesizes that, like oil price volatility and oil price increase, economic growth triggers countries to look for sustainable alternative energy that produces less CO2 and other GHGs. the scenario is different for oil-exporting and major oil-importing countries. In this study, we probe and assess the effect of international crude oil price volatility, international oil price increase empirically and economic growth and R&D spending on GHG emission in oil-exporting and -importing countries.
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