Investigating the environmental Kuznets Curve and the role of green energy: Emerging and developed markets

ABSTRACT

In this study, the validity of the Environmental Kuznets Curve (EKC) hypothesis and the effect of green energy sources to decrease CO₂ emissions are examined for emerging and developed markets from 1990 to 2011 using a pooled mean group (PMG) estimator. Empirical findings of this study suggest that the EKC hypothesis is not confirmed by emerging markets; meanwhile, it is strongly supported by developed markets. The long-run elasticity results of per capita data may also imply a divergence between emerging markets and developed markets regarding CO₂ emissions. On the other hand, the findings of this study indicate that renewable energy sources will play an important role in reducing CO₂ emissions for both panel groups in the long run.

KEYWORDS:

• EKC hypothesis
• pooled mean group
• renewable energy
• developed markets
• emerging markets

Notes

¹ The divergence scatter of CO₂ emissions between emerging and developed markets is examined by using CO₂ emissions per capita data of IEA for the period 1990–2011.