The influence of real output, renewable and non-renewable energy, trade and financial development on carbon emissions in the top renewable energy countries

Eyup Dogan () and Fahri Seker

Renewable and Sustainable Energy Reviews, 2016, vol. 60, issue C, 1074-1085

Abstract: Due to tremendous increase in the level of carbon dioxide (CO2) emissions in the last several decades, a number of studies in the energy-growth-environment literature have attempted to identify the determinants of CO2 emissions. A major criticism related to the existing studies, we realize, is the selection of panel estimation techniques. Almost all studies use panel methods that ignore the issue of cross-sectional dependence even though countries in the panel are most likely heterogeneous and cross-sectionally dependent. In addition, the majority of existing studies use aggregate energy consumption, and thus fail to identify the impacts of energy consumption by sources on the environment. In order to fulfill the mentioned gaps in the literature, this empirical study analyzes the influence of the real income, renewable energy consumption, non-renewable energy consumption, trade openness and financial development on CO2 emissions in the EKC model for the top countries listed in the Renewable Energy Country Attractiveness Index by employing heterogeneous panel estimation techniques with cross-section dependence. We find that the analyzed variables become stationary at their first-differences by using the CADF and the CIPS unit root tests, and the analyzed variables are cointegrated by employing the LM bootstrap cointegration test. By using the FMOLS and the DOLS, we also find that increases in renewable energy consumption, trade openness and financial development decrease carbon emissions while increases in non-renewable energy consumption contribute to the level of emissions, and the EKC hypothesis is supported for the top renewable energy countries.

Keywords: Heterogeneity; Cross-sectional dependence; Renewable energy; EKC hypothesis; Financial development; Trade (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (244)

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DOI: 10.1016/j.rser.2016.02.006

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