Factors influencing carbon emissions under EKC scheme and the role of renewable energy in Gulf Cooperation Council countries

Abstract

Objectives: In the face of the rising challenges of climate change, lowering emissions has become a key driver of environmental sustainability and sustainable growth. This study examines the validity’ Environmental Kuznets Curve (EKC) scheme for Gulf Cooperation Council (GCC) countries between 2000 and 2020 by considering different types of energy sources (total, non-renewable, renewable), urbanization, and trade openness. Methods/Approach: Therefore, we consider the issue of cross-sectional dependency within panel data by testing its presence and employing the CIPS test to inspect the unit root. The Pedroni, Kao and Westerlund panel data cointegration tests have also been used to check the presence of long-run linkages. In addition, we apply the fully modified ordinary least squares (FMOLS), dynamic ordinary least squares (DOLS), and pooled mean group (PMG) techniques to explore the long-run dynamics between variables. Results: First, it is observed that the EKC hypothesis is established in the case of six countries of GCC using CO2 emissions. Second, the direct connection between economic complexity and environmental degradation is obtained. Third, energy consumption seems also to be negative and significant. Fourth, urbanization and trade openness contribute to increase CO2. Conclusions: Findings thus point to the fact that the promotion of energy contributes to reduce the harmful effect of economic complexity over dioxide carbon emissions as consequence of scale and composition effect. In this sense, the study suggests some noteworthy environmental policy implications to reduce the level of carbon dioxide emissions in Gulf Cooperation Council countries.