Will be there New CO2 Emitters in the Future? Evidence of Long-run Panel Co-integration for N-11 Countries

Nasre Esfahani, Mohammad and Rasoulinezhad, Ehsan (2015): Will be there New CO2 Emitters in the Future? Evidence of Long-run Panel Co-integration for N-11 Countries. Published in: International Journal of Energy Economics and Policy , Vol. 6, No. 3 (22 July 2016): pp. 463-470.

Abstract

This article tries to explore the long-run nexus between oil consumption, gross domestic product (GDP) and carbon dioxide (CO2) emissions in the next eleven (N-11) countries over the period 1980-2013, by using the panel c-ointegration, the panel dynamic ordinary least squares (DOLS) and the panel fully modified ordinary least squares (FMOLS) approaches.The empirical findings indicate that there is a bidirectional long-run linkage between oil consumption - GDP per capita and oil consumption - CO2 emissions. Moreover the inverted U-shaped linkage between the square of GDP per capita and CO2 emissions, supports the existence of environmental kuznets curve hypothesis. With estimations through the panel DOLS and FMOLS, the long-run elasticity of oil consumption per capita to CO2 emissions per capita is calculated about 0.96% and positive which is in contrast to the coefficient sign of its elasticity to GDP per capita (−0.48%). Moreover, the elasticity of GDP per capita and CO2 emissions per capita to oil consumption per capita are −0.32% and 0.94%, respectively. These findings prove the negative contribution of non-renewable energy (oil) consumption per capita to GDP per capita in the N-11 group. Furthermore, due to the bidirectional long-run relationships between oil consumption and CO2 emissions, these 11 countries should find the efficient energy policies which are in line with CO2 mitigation and reaching a higher GDP per capita growth.

• Item Type: MPRA Paper
• Language: English
• Keywords: Oil Consumption Per Capita, Gross Domestic Product Per Capita, Carbon Dioxide, Emissions Per Capita
• Subjects: Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q43 - Energy and the Macroeconomy; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q47 - Energy Forecasting

References

Abid, M. (2015), The close relationship between informal economic growth and carbon emissions in Tunisia since 1980: The (ir)relevance of structural breaks. Sustainable Cities and Society, 15, 11-21.

Alam, M.J. Begum, I.A., Buysse, J., Rahman, S., Huylenbroeck, G.V.(2011), Dynamic modeling of causal relationship between energy consumption, CO2 emissions and economic growth in India. Renewable and Sustainable Energy Reviews, 15(6), 3243-3251.

Al-Iriani, M.A. (2006), Energy-GDP relationship revisited: An example from GCC countries using panel causality. Energy Policy, 34(17), 3342-3350.

Al-Mulali, U. (2011), Oil consumption, CO2 emission and economic growth in MENA countries. Energy, 36(10), 6165-6171.

Al-Mulali, U., Binti Che Sab, C.N. (2012), The impact of energy consumption and CO2 emission on the economic growth and financial development in the Sub Saharan African countries. Energy,39(1), 180-186. Available from: http://www.dx.doi.org/10.1016/j.energy.2012.01.032.

Ang, J.B. (2008), Economic development, pollutant emissions and energy consumption in Malaysia. Journal of Policy Model, 30, 271-278.

Anononyms. (2015), International Energy Statistics. U.S. Energy Information Administration. Available from: http://www.eia.gov/ cfapps/ipdbproject/iedindex3.cfm?tid=5&pid=53&aid=1. [Last accessed on 2015 July 17].

Apergis, N., Payne, J.E. (2010), The emissions, energy consumption and growth nexus: Evidence from the commonwealth of independent states. Energy Policy, 38, 650-655.

Begum, R.A., Sohag, K., Abdullah, S.M.S., Jaafar, M. (2015), CO2 emissions, energy consumption, economic and population growth in Malaysia. Energy Reviews, 41(594-601).

Bhattacheraya, M., Bhattacharya, S. (2015), The role of technology on the dynamics of coal consumption – Economic growth: New evidence from China. Applied Energy, 154, 686-695.

Bildirici, M., Bakirtas, T. (2014), The relationship among oil, natural gas and coal consumption and economic growth in BRICTS countries.Energy, 65, 134-144.

Bloch, H., Rafiq, S., Salim, R. (2012), Coal consumption, CO2 emission and economic growth in China: Empirical evidence and policy responses. Energy Economics, 34(2), 518-528.

British Petroleum. (2015), BP Statistical Review of World Energy 2015. Petroleum, British. Available from: http://www.bp.com/en/global/corporate/about-bp/energy-economics/statistical-review-ofworld-energy/statistical-review-downloads.html. [Last accessed on 2015 Sep 28].

Govindaraju, V.G.R., Tang, C.F. (2013), The dynamic links between CO2 emissions, economic growth and coal consumption in China and India. Applied Energy, 104, 310-318. Available from: http://www.dx.doi.org/10.1016/j.apenergy.2012.10.042.

Chang, T.H., Huang, C.M., Lee, M.C. (2009), Threshold effect of the economic growth rate on the renewable energy development from a change in energy price: Evidence from OECD countries. Energy Policy, 37(12), 796-5802. Available from: http://www.dx.doi.org/10.1016/j.enpol.2009.08.049.

Cheng, B.S. (1997), Energy consumption and economic growth in Brazil,Mexico and Venezuela: A time series analysis. Applied Economics Letters, 4, 671-674.

Choi, I. (2001), Unit root tests for panel data. Journal of International Money and Finance, 20(2), 249-272.

Farhani, S., Shahbaz, M. (2014), What role of renewable and nonrenewable electricity consumption and output is needed to initially mitigate CO2 emissions in MENA region?Renewable and Sustainable Energy Reviews, 40, 80-90.

Glasure, Y.U., Lee, A.R. (2002), Energy and national income in Korea:Further evidence on the role of omitted variables. Energy Economics,24, 355-365.

Hannan, N. (2015a), Analysing the long-run relationship among oil market, nuclear energy consumption,and economic growth: An evidence from emerging economies. Energy, 89, 421-434.

Hannan, N. (2015b), Can nuclear energy stimulated economic growth? Evidence from highly industrialised countries. International Journal of Energy Economics and Policy, 5(1), 164-173.

Heidari, H., Katircioğlu, S.T., Saeidpour, L. (2015), Economic growth,CO2 emissions, and energy consumption in the five ASEAN countries. International Journal of Electrical Power and Energy Systems, 64, 785-791. Available from: http://www.linkinghub.elsevier.com/retrieve/pii/S0142061514005250.

Huang, B.N., Hwang, M.J., Yang, C.W. (2008), Causal relationship between energy consumption and GDP growth revisited: A dynamic panel data approach. Ecological Economics, 67(1), 41-54.

Ben Jebli, M., Ben Youssef, S. (2015), The environmental Kuznets curve,economic growth, renewable and non-renewable energy, and trade in Tunisia. Renewable and Sustainable Energy Reviews, 47, 173-185.

Kao, C. (1999), Spurious regression and residual based tests for cointegration in panel data. Journal of Econometrics, 90, 1-44.

Kasman, A., Duman, Y.S. (2015), CO2 emissions, economic growth, energy consumption, trade and urbanization in new EU member and candidate countries: A panel data analysis. Economic Modelling,44, 97-103.

Kasman, A., Duman, Y.S. (2015), CO2 emissions, economic growth, energy consumption, trade and urbanization in new EU member and candidate countries: A panel data analysis. Economic Modelling,44, 97-103. Available from: http://www.linkinghub.elsevier.com/retrieve/pii/S0264999314003770.

Lee, C., Chang, C. (2008), Energy consumption and economic growth in Asian economies: A more comprehensive analysis using panel data.Resource and Energy Economics, 30(1), 50-65.

Levin, A., Lin, C.F., Chu, C.S.J. (2002), Unit root tests in panel data:Asymptotic and finite-sample properties. Journal of Econometrics,108(1), 1-24.

Liddle, B. (2012), The importance of energy quality in energy intensive manufacturing: Evidence from panel cointegration and panel FMOLS. Energy Economics, 34, 1819-1825.

Long, X., Naminse, E.Y., Du, J., Zhuang, J. (2015), Nonrenewable energy,renewable energy, carbon dioxide emissions and economic growth in China from 1952 to 2012. Renewable and Sustainable Energy Reviews, 52, 680-688. Available from: http://www./linkinghub.elsevier.com/retrieve/pii/S1364032115008230.

Lotfalipour, M.R., Falahi, M.A., Ashena, M. (2010), Economic growth,CO2 emissions, and fossil fuels consumption in Iran. Energy, 35(12),5115-5120. Available from: http://www.linkinghub.elsevier.com/retrieve/pii/S0360544210004317.

Maddala, G.S., Wu, S. (1999), A comparative study of unit root tests with panel data and a new simple test. Oxford Bulletin of Economics and Statistics, 61, 631-652.

Menyah, K., Wolde-Rufael, Y. (2010), CO2 emissions, nuclear energy,renewable energy and economic growth in the US. Energy Policy,38(6), 2911-2915.

Ozturk, I., Acaravci, A. (2010), CO2 emissions, energy consumption and economic growth in Turkey. Renewable and Sustainable Energy Reviews, 14(9), 3220-3225.

Ozturk, I., Acaravci, A. (2013), The long-run and causal analysis of energy,growth, openness and financial development on carbon emissions in Turkey. Energy Economics, 36, 262-267.

Pedroni, P. (1999), Critical values for cointegration tests in heterogeneous panels with multiple regressors. Oxford Bulletin of Economics and Statistics, 61, 653-670.

Pedroni, P. (2004), Panel cointegration; Asymptotic and finite sample properties of pooled time series tests, with an application to the PPP hypothesis. Econometric Theory, 20, 597-625.

Saboori, B., Sapri, M., Bin Baba, M. (2014), Economic growth, energy consumption and CO2 emissions in OECD (Organization for Economic Co-operation and Development)’s transport sector: A fully modified bi-directional relationship approach. Energy, 66, 150-161.Available from: http://www.dx.doi.org/10.1016/j.energy.2013.12.048.

Saboori, B., Sulaiman, J. (2013), CO2 emissions, energy consumption and economic growth in Association of Southeast Asian Nations (ASEAN) countries: A cointegration approach. Energy, 55, 813-822.Available from: http://www.sciencedirect.com/science/article/pii/ S0360544213003496.

Sachs, G. (2007), BRICS and beyond. Goldman Sachs Global Economics Group. Available from: http://www.goldmansachs.com/japan/ideas/brics/book/BRIC-Full.pdf.

Saidi, K., Hammami, S. (2015), The impact of CO2 emissions and economic growth on energy consumption in 58 countries. Energy Reports, 1, 62-70. Available from: http://www.dx.doi.org/10.1016/j.egyr.2015.01.003.

Salahuddin, M., Gow, J., Ozturk, I. (2015), Is the long-run relationship between economic growth, electricity consumption, carbon dioxide emissions and financial development in Gulf cooperation council countries robust? Renewable and Sustainable Energy Reviews, 51,317-326.

Shafiei, S., Salim, R.A. (2014), Non-renewable and renewable energy consumption and CO2 emissions in OECD countries: A comparative analysis. Energy Policy, 40, 80-90.

Shahbaz, M., Hye, Q.M.A., Tiwariet, A., Leitão, N. (2013), Economic growth, energy consumption, financial development, international trade and CO2 emissions in Indonesia. Renewable and Sustainable Energy Reviews, 25, 109-121. Available from: http://www.dx.doi.org/10.1016/j.rser.2013.04.009.

Shahbaz, M., Lean, H.H., Farooq, A. (2013), Natural gas consumption and economic growth in Pakistan. Renewable and Sustainable Energy Reviews, 18, 87-94.

Soytas, U., Sari, R., Ewing, B.T. (2007), Energy consumption, income,and carbon emissions in the United States. Ecological Economics,62(3), 482-489.

Squalli, J. (2007), Electricity consumption and economic growth: Bounds and causality analyses of OPEC members. Energy Economics, 29,1192-1205.

Tang, C.F., Tan, B.W. (2015), The impact of energy consumption,income and foreign direct investment on carbon dioxide emissions in Vietnam. Energy, 79, 447-454.

Vidyarthi, H. (2013), Energy consumption, carbon emissions and economic growth in India. World Journal of Science, Technology and Sustainable Development, 10(4), 278-287.

Wang, K.M. (2013), The relationship between carbon dioxide emissions and economic growth: Quantile panel-type analysis. Quality and Quantity, 47(3), 1337-1366.

Wang, S.S., Zhou, D.Q., Zhou, P., Wang, Q.W. (2011), CO2 emissions,energy consumption and economic growth in China: A panel data analysis. Energy Policy, 39(9), 4870-4875. Available from: http://www.dx.doi.org/10.1016/j.enpol.2011.06.032.

Wolde-Rufael, Y. (2009), Energy consumption and economic growth:The experience of African countries revisited. Energy Economics,31, 217-224.

Wooldridge, J.M. (2013), Introductory Econometrics: A Modern Approach. 5th ed. USA: Cengage Learning Publication. World Bank. (2015), World Development Indicators. World Bank.Available from: http://www.data.worldbank.org. [Last accessed on 2015 Jul 17].

Yang, Z., Zhao, Y. (2014), Energy consumption, carbon emissions, and economic growth in India: Evidence from directed acyclic graphs.Economic Modelling, 38, 533-540.

Yildirim, E. (2014), Energy use, CO2 emission and foreign direct investment: Is there any inconsistence between causal relations? Frontiers in Energy, 8(3), 269-278.

Yildirim, E., Aslan, A. (2012), Energy consumption and economic growth nexus for 17 highly developed OECD countries: Further evidence based on bootstrap-corrected causality tests. Energy Policy, 51,985-993.

Zhang, X.P., Cheng, X.M. (2009), Energy consumption, carbon emissions,and economic growth in China. Ecological Economics, 68(10),2706-2712.