Short- and Long-Run Drivers of CO₂ Emissions in the Top Ten CO₂ -Emitting Economies: Evidence from Decoupling and Nonlinear Dynamics
DOI:
https://doi.org/10.64534/cy3gfs50Keywords:
CO₂ emissions, energy efficiency, decarbonization, renewable energy, economic growth.Abstract
This study employs a multi-stage STIRPAT-based framework by combining decoupling analysis, cross-sectionally augmented autoregressive distributed lag (CS-ARDL) model and panel threshold model to examine economic growth (GDP), population (POP), energy efficiency (EE), decarbonization (DEC) and renewable energy (REN) as drivers of CO2 emissions in the top ten CO₂-emitting economies from 1990 to 2024 using World Bank data. The decoupling analysis reveals heterogeneous performance, either strong decoupling or weak decoupling during the sampled period. No country falls within the expansive coupling or negative decoupling categories. The CS-ARDL estimates show that GDP consistently raises emissions both in the short and long run, while POP exerts significant environmental pressure in the long run. In contrast, EE, DEC and REN reduce emissions, with their effects becoming stronger over time. In the panel threshold regression, EE (output per unit of energy used) and DEC (reciprocal of the CO2 produced per unit of energy used) are used as threshold variables. The threshold analysis confirms significant nonlinear effects of EE and DEC on carbon emissions, with threshold values estimated at 2.904 and 0.219, respectively. The findings reveal that economic growth increases CO₂ emissions across all regimes; however, the magnitude of this effect declines after the threshold levels are exceeded, indicating that higher EE and stronger decarbonization efforts help mitigate environmental degradation. Additionally, POP effects vary across regimes, suggesting the presence of heterogeneous environmental impacts under different efficiency and decarbonization conditions. Overall, the findings demonstrate that combining decoupling analysis with short- and long-run elasticity estimation and nonlinear threshold modelling provides a coherent and policy-relevant understanding of emissions dynamics in major polluting economies.
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