Impact of Energy Use Segregation on Carbon Emissions: The Role of FDI in Net Importing and Net Exporting Countries

Abstract

This paper proposes an empirical model for exploring the effect of foreign direct investment, income, renewable and non-renewable energy consumption, and oil price on carbon emissions in net exporting countries (NECs) and net importing countries (NICs) for the period of 1991–2015. Following the conceptual framework of environmental Kuznets curve (EKC) hypothesis and empirical IPAT framework, the analysis has been carried out. The empirical results indicate that foreign direct investment, income, and renewable energy consumption have an N-shaped association with carbon emissions. On contrary, the impact of non-renewable energy consumption on carbon emissions is positive and the impact of oil price on carbon emissions is negative. Moreover, the empirical evidence recommends long-run policies in connection with the promotion of clean technologies, less dependence on natural resources, and advancement in environmental awareness and incentives for replacing old polluting technologies.