Factors influencing CO2 emissions in the MENA countries: the roles of renewable and non-renewable energy

Abstract

This article seeks to examine the impacts of renewable and non-renewable energy on carbon dioxide emissions for 14 Middle East and North Africa economies using fully modified least-squares and vector error correction model techniques. Different sectoral outputs (agricultural, industry, and services) are considered in the analysis to find the influence of each sector on carbon emissions and to validate the environmental Kuznets curve model at both aggregate and disaggregate levels. The fully modified least-squares estimates show that renewable energy enhances environmental quality, whereas non-renewable energy deteriorates it. We also find that the industry sector has the highest contribution to environmental degradation. The results of the vector error correction model technique show a two-way linkage between CO₂ emissions and renewable energy and between CO₂ emissions and non-renewable energy in both short and long runs. At the sectoral level, we also find a two-way linkage between agricultural value added and CO₂ emissions, a unidirectional relationship running from emissions to industry value added, and a unidirectional linkage running from services value added to CO₂ emissions in both short and long runs. Therefore, governments must focus their actions on environmental policies of a green and inclusive economy that combine tools of environmental economics with those of the ecological economy. This can be considered a call for policymakers to take relevant and quick policies and actions towards low-carbon energy to reach these dual objectives.

Keywords: CO2 emissions; Non-renewable energy; Renewable energy; Sectoral outputs.