The Impact of Economic Growth on CO2 Emissions and Energy Consumption -In the Gulf Cooperation Council Countries-

Abstract

The research aims to test the Environmental Kuznets Curve (EKC) hypothesis and analyses the causality relationship between carbon (CO2) emissions, energy consumption, and Gross Domestic Product (GDP) per capita in the case of Gulf Cooperation Council – GCC – countries using the time series data for the period 1990–2014. Using the Vector Error Correction Model (VECM), it indicates that the EKC hypothesis does not hold in five of the six countries, and the inverted U-shaped curve was identified only in the UAE, regarding the direction of causality with Granger Causality and Vector Auto-Regressive (VAR) tests. It appears to be a unidirectional causality going from economic growth represented in GDP per capita to energy consumption. Such results suggest that reducing energy consumption and controlling CO2 emissions policies could be adopted in the GCC economies without much concern about its effects on economic growth.