Investigating the relevance of Environmental Kuznets curve hypothesis in Saudi Arabia: towards energy efficiency and minimal carbon dioxide emission

Abstract

The Saudi economy is driven by the energy sector which mainly derived from petroleum-based resources. Besides export, the Kingdom’s consumption of this resource showed a significant increase which linearly promoting CO 2 emission increment. Therefore, it is essential to model the Kingdom’s energy consumption to estimate the profile of her future energy consumption. This work explores modelling and multi-step-ahead predictions for energy use, gross domestic product (GDP), and CO 2 emissions in Saudi Arabia using previous data (1980–2018). The dynamic interrelationship of the variable’s nexus was tested using the Granger causality and cointegration method in the short-run and long-run. In the long-run, the models reveal an inverted U-shape relation between CO 2 emissions and GDP, validating Environmental Kuznets curve. When energy consumption is increased by 1%, there will be an increase in CO 2 emissions by 0.592% at constant GDP, and when GDP is increased by 1%, there will be an increase in CO 2 emissions by 0.282% at constant energy used. CO 2 emissions appear to be both energy consumption and income elastic in Saudi Arabia in the long-run equilibrium. Granger causality based on vector error correction method reveals unidirectional causality from income to CO 2 emissions, and bidirectional causality from CO 2 emissions to energy consumption and vice versa in the short-run. In the long-run, bidirectional causality from income to CO 2 emissions and vice versa and unidirectional causality from the used energy to CO 2 emissions were observed. Also, there is a bidirectional causality from GDP to energy used and vice versa in the short-run, meaning that GDP and energy consumption are interdependent. Saudi Arabia needs to increase energy infrastructure investments and increase energy efficiency by implementing energy management policies, reducing environmental pollution, and preventing the negative effect on economic growth. Graphical abstract

The interlinkage between land resources, food, water, income, and sustainable environment: Evidence from China's economy with COP27 perspective

“…They indicate that increasing tourism and the occurrence of tourists is good for limiting harmful emissions. Fifth, the role of energy use is positive and significant with CO 2 e, indicating that energy use increases CO 2 e, in line with the empirical results of (Alsaedi et al, 2022; Sikder et al, 2022). Overall, using REO, TOUR, and GDP is beneficial in reducing CO 2 e. At the same time, ENU and GDPS harm environmental quality by increasing CO 2 .…”

“…The relationships of explanatory variables showed significant findings with the findings of the following studies (Alsaedi et al, 2022;Anser et al, 2021;Gu et al, 2023;Mostafaeipour et al, 2022;Sadiq et al, 2023;Sikder et al, 2022;Tong et al, 2022;Xiaosan et al, 2021). Firstly, the utilization of TNRNT, including but not restricted to fossil fuels and forests, has a notable impact on the escalation of CO 2 e. The fossil fuels burning results in the emission of significant quantities of CO 2 into the atmosphere.…”

“…The estimations demonstrated that energy use of 1% increase significantly increases emissions by almost 0.23% with a bidirectional association in developing economies. In Saudi Arabia, Alsaedi et al (2022) explored the energy‐emission nexus from the period of 1980–2018. The findings asserted that energy use increased by 1% in the Saudi economy, which increased CO 2 e by 0.592%.…”

Exploring the relationship between economic diversification and energy-related CO2 emissions in a petroleum-producing country

“…Only one study, which explored the relationship between CO 2 emissions and sectoral economic growth (Samargandi, 2017), reported a positive relationship between the growth of emissions and that of industrial value added to the Saudi GDP. Thus, the results of testing the EKC hypothesis are inconclusive as it was Energy-related CO 2 emissions validated in some studies (Alsaedi et al, 2022;Kahia et al, 2021;Mahmood, 2022;Omri et al, 2019) and rejected in others (Al-Torkistani et al, 2016;Raggad, 2018). Two studies have examined the validity of the EKC hypothesis in Bahrain on a standalone basis, and six studies have examined its validity within a group of countries (Table 1).…”