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Oil Price, Energy Consumption, and CO 2 Emissions in Turkey. New Evidence from a Bootstrap ARDL Test

Author

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  • Mohammed Abumunshar

    (Department of Accounting and Finance, Faculty of Economics and Administrative Sciences, Cyprus International University, Mersin 10, Haspolat 99040, Cyprus)

  • Mehmet Aga

    (Department of Accounting and Finance, Faculty of Economics and Administrative Sciences, Cyprus International University, Mersin 10, Haspolat 99040, Cyprus)

  • Ahmed Samour

    (Banking and Finance Department, Faculty of Economics and Administrative Sciences, Near East University, Nicosia, TRNC, 10 Mersin, Lefkosa 99040, Turkey)

Abstract

The main objective of this research was to test the effect of oil prices, renewable and non-renewable energy consumption, and economic growth on Turkey’s carbon emissions by using three co-integration tests, namely, the newly-developed bootstrap autoregressive distributed lag (ARDL) testing technique as proposed by (McNown et al., 2018); the new approach involving the Bayer–Hanck (2013) combined co-integration test; and the H-J (2008) co-integration technique, which induces two dates of structural breaks. The autoregressive distributed lag model (ARDL), dynamic ordinary least squares (DOLS), canonical cointegrating regression (CCR), and fully modified ordinary least square (FMOLS) approaches were utilized to test the long-run interaction between the examined variables. The Granger causality (GC) analysis was utilized to investigate the direction of causality among the variables. The long-run coefficients of ARDL, DOLS, CCR, and FMOLS showed that the oil prices had a negative influence on CO 2 emissions in Turkey in the long run. Furthermore, the findings demonstrate that non-renewable energy, which includes oil, natural gas, and coal, increased CO 2 emissions. In contrast, renewable energy can decrease the environmental pollution. These empirical findings can be attributed to the fact that Turkey is heavily dependent on imported oil; more than 50% of the energy requirement has been supplied by imports. Hence, oil price fluctuations have severe effects on the economic performance in Turkey, which in turn affects energy consumption and the level of carbon emissions. The study suggests that the rate of imported oil in Turkey must be decreased by finding more renewable energy sources for the energy supply formula to avoid any undesirable effects of oil price fluctuations on the CO 2 emissions, and also to achieve sustainable development.

Suggested Citation

  • Mohammed Abumunshar & Mehmet Aga & Ahmed Samour, 2020. "Oil Price, Energy Consumption, and CO 2 Emissions in Turkey. New Evidence from a Bootstrap ARDL Test," Energies, MDPI, vol. 13(21), pages 1-15, October.
  • Handle: RePEc:gam:jeners:v:13:y:2020:i:21:p:5588-:d:434882
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