The Role of Natural Gas in Mitigating Greenhouse Gas Emissions: The Environmental Kuznets Curve Hypothesis for Major Gas-Producing Countries

Abstract

Since global warming has become a serious threat and GHG emissions are one of the main causes of it, analyzing the interactions between variables related to climate change has gained importance. This study investigates the nexus of per capita CO2 emissions, per capita real GDP or income, per capita natural gas consumption, urban population, and trade openness by examining the validity of the environmental Kuznets curve (EKC) hypothesis for a panel of selected gas-producing countries over the period 1990–2020. To these data, slope homogeneity test, Granger causality in panels, stationarity tests, and cointegration tests are applied. A particular focus is on procedures that enable cross-sectional dependence. Admitting slope heterogeneity, the estimators provide mixed results. The findings, however, do provide evidence in favor of the EKC hypothesis in at least some of our sample countries. Furthermore, there are important policy implications that must be taken into consideration. This includes investing in clean technologies to reduce emissions and accelerating reform of fossil fuel subsidies.