The Relationship Between CO2 Emissions, Renewable Energy, GDP, and Oil Prices in Türkiye

Abstract

This study aims to examine the long-run causal relationship between CO2 emissions, renewable energy consumption, GDP growth, and oil prices in Türkiye. The study covers the period 1990-2020. Toda-Yamamoto's causality test is used to avoid some of the problems faced by Granger's causality test. Furthermore, the study also utilizes variance decomposition and impulse-response function methods. The Toda-Yamamoto causality test indicates a two-way causal relationship between renewable energy and economic growth and between renewable energy and oil prices. The study revealed an undeniable and evident causality relationship in only one direction, from economic growth towards CO2 emissions and oil prices. Also, a unidirectional causal relationship between CO2 emissions and both oil prices and renewable energy was found. In order to achieve sustainable development and protect the environment, Türkiye requires renewable energy. Solar, wind, and hydropower can lessen the dependency on fossil fuels, generate employment opportunities and stimulate economic progress.