The Impact of Financial Efficiency and Renewable Energy Consumption on CO2 Emission Reduction in GCC Economies: A Panel Data Quantile Regression Approach

Lena Bedawi Elfadli Elmonshid (), Omer Ahmed Sayed, Ghadda Mohamed Awad Yousif, Kamal Eldin Hassan Ibrahim Eldaw and Muawya Ahmed Hussein
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Lena Bedawi Elfadli Elmonshid: Department of Finance and Investment, Faculty of Business Administration, University of Tabuk, Tabuk 71491, Saudi Arabia
Omer Ahmed Sayed: Department of Finance and Investment, Faculty of Business Administration, University of Tabuk, Tabuk 71491, Saudi Arabia
Ghadda Mohamed Awad Yousif: Department of Economics, College of Business and Administration Princess, University of Princess Nourah Bint Abdul Rahman, Riyad 11671, Saudi Arabia
Kamal Eldin Hassan Ibrahim Eldaw: College of Applied Studies and Community Service, Imam Abdurrahman Bin Faisal University, Al-Dammam 31441, Saudi Arabia
Muawya Ahmed Hussein: Department of Finance and Economics, College of Commerce and Business Administration, Dhofar University, Salalah 211, Oman

Sustainability, 2024, vol. 16, issue 14, 1-16

Abstract: As prominent oil producers, Gulf Cooperation Council (GCC) countries have played a significant role in the global energy market. However, as the world’s attention increasingly shifts towards environmental sustainability, understanding the implications of the GCC’s economic activities on CO2 emissions becomes indispensable. This research paper investigates the relationship between specific economic indicators and their impact on CO2 emissions in the GCC from 2001 to 2021. This study employs quantile regression, a robust statistical method that estimates the conditional quantiles of a response variable given a set of predictor variables. The findings reveal several essential insights: Financial institution efficiency is significant and negative at a 1% level at the lower (10th, −83,537.3) and higher quantiles (90th, −549,002.3). The relationship between the GDP per capita and CO2 emissions varies across quantiles, highlighting the complexity of the growth–environment nexus. Total patents exhibit a positive and significant relationship with emissions, underscoring the importance of directing innovation towards environmentally sustainable solutions. Renewable energy consumption displays a nuanced relationship with CO2 emissions, with a more substantial negative impact observed at higher consumption levels. This underscores the potential of renewable energy to mitigate emissions when integrated at scale. This study’s outcomes hold crucial policy implications for GCC countries as they seek to align economic growth with environmental sustainability. The findings emphasize the importance of fostering financial institution efficiency, promoting green innovation, and expanding renewable energy sources to reduce emissions.

Keywords: financial efficiency; carbon dioxide emissions; GCC economies; quantile regression; panel data (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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