The effects of natural gas and oil consumption on CO2 emissions in GCC countries:asymmetry analysis.

Abstract

Oil and gas are key energy sources in the Gulf Cooperation Council (GCC) region. The present study examines the asymmetrical environmental effects of these energy sources and also tests the environmental Kuznets curve (EKC) from 1975 to 2019. In the long run, the EKC is corroborated in Kuwait and Saudi Arabia. But the EKC is not validated in the GCC Panel. Increasing oil consumption raises carbon dioxide (CO2) emissions in all investigated GCC countries, and decreasing oil consumption reduces CO2 emissions in Kuwait, Oman, Saudi Arabia, and the United Arab Emirates (UAE). The effect of oil consumption is found asymmetrical in Qatar and symmetrical in the rest of GCC countries. Increasing natural gas consumption (NGC) carries a positive effect in all investigated GCC countries, and decreasing NGC reduces emissions in Oman, Qatar, and the UAE. Moreover, NGC's effects are asymmetrically in all GCC countries except Qatar. In the panel estimates, both increasing and decreasing oil and NGC have positive effects on CO2 emissions. The long-run effect of oil consumption on CO2 emissions is larger than the effect of NGC in most GCC economies and panel results. In the short run, increasing and decreasing oil consumption and NGC have a positive effect on emissions in all investigated economies except Saudi Arabia. In the long run, coefficients of decreasing oil consumption are found significantly greater than coefficients of increasing NGC in Kuwait, Oman, Saudi Arabia, the UAE, and the whole GCC. This finding corroborates that increasing CO2 emissions with increasing NGC is lower than decreasing CO2 emissions with decreasing oil consumption. Hence, we recommend these countries switch from oil consumption to NGC to reduce overall CO2 emissions.