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The effects of electricity consumption, economic growth, financial development and foreign direct investment on CO2 emissions in Kuwait

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  • Salahuddin, Mohammad
  • Alam, Khorshed
  • Ozturk, Ilhan
  • Sohag, Kazi

Abstract

This study examined the empirical effects of economic growth, electricity consumption, foreign direct investment (FDI), and financial development on carbon dioxide (CO2) emissions in Kuwait using time series data for the period 1980–2013. To achieve this goal, we applied the autoregressive distributed lag (ARDL) bounds testing approach and found that cointegration exists among the series. Findings indicate that economic growth, electricity consumption, and FDI stimulate CO2 emissions in both the short and long run. The VECM Granger causality analysis revealed that FDI, economic growth, and electricity consumption strongly Granger-cause CO2 emissions. Based on these findings, the study recommends that Kuwait reduce emissions by expanding its existing Carbon Capture, Utilization, and Storage plants; capitalizing on its vast solar and wind energy; reducing high subsidies of the residential electricity scheme; and aggressively investing in energy research to build expertise for achieving electricity generation efficiency.

Suggested Citation

  • Salahuddin, Mohammad & Alam, Khorshed & Ozturk, Ilhan & Sohag, Kazi, 2018. "The effects of electricity consumption, economic growth, financial development and foreign direct investment on CO2 emissions in Kuwait," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P2), pages 2002-2010.
  • Handle: RePEc:eee:rensus:v:81:y:2018:i:p2:p:2002-2010
    DOI: 10.1016/j.rser.2017.06.009
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    Keywords

    Q32; Q43; Cointegration; CO2 emissions; Economic growth; Energy consumption; GCC countries; Granger causality;

    JEL classification:

    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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