Revisited the nexus of energy variables and carbon dioxide emissions: A panel data nonlinear regression

Abstract

Empirical analysis is conducted to examine the nexus of energy consumption, energy intensity and carbon dioxide (CO2) emissions using the global panel dataset of 1990 to 2014. The main objectives are to compare the nexus between oil-importing versus oil-exporting countries, to examine the nexus between short versus long-run counterparts, and to reveal the asymmetric effects of oil price changes in the nexus examined. The main contribution of this study is to analyze the asymmetric effects of oil price changes using a nonlinear autoregressive distributed lags (NARDL) model. A few variables are included, which are energy consumption, energy intensity, total and sectoral CO2 emissions, and world crude oil price, in which the oil price acts as a control variable. The results show that CO2 emission affects energy consumption positively for both groups of countries, with a higher impact in oil-importing countries. Besides, a rise in CO2 emissions shrinks the energy intensity of oil-exporting countries but raises the energy intensity of oil-importing countries. The oil price has asymmetric effects on energy consumption, with larger effect from oil price increases. Oil price has a limited influence on energy intensity, while the higher oil price causes higher emissions. The oil-dependency factor matters, with oil-importing countries experiencing larger impacts from oil price changes. It is suggested that policy decision/ planning should co-exist with the environmental concern, to sustain the environmental quality and economic growth.