Evaluating the effects of energy and economic growth on Carbon dioxide emission (using spatial panel data)

Energy is one of the most important inputs in production. Energy usage and energy diffusion of fossil fuels in process of production cause greenhouse gases (CO2) emission and destruction of environment. According to the importance of issues like energy usage and economic growth, this paper, concerning the effects of proximity, evaluates the effects of energy usage and economic growth on emission of Carbon dioxide (CO2) in MENA Zone countries during the period of 1994-2013. In every country, greenhouse gases (CO2) emission is the function of not only domestic factors but also economic activities of neighboring countries. 

In order to investigate the impact of energy consumption, economic growth and carbon dioxide emissions in the Middle East and North Africa, LM test was used to examine the spatial dependence between variables and then the research model was estimated using the spatial panel data approach.

The results of the model estimation indicate that proximity effect is verified in the model studying on. Also, the results show that log variable of energy usage has positive and significant effect on CO2 emission. Log variable of income per capita affects CO2 emission positively and significantly, and square log variable of per capita income has negative and significant effect on dependent variable.

Based on the research results, the environmental hypothesis of Kuznets is accepted for the studied countries. Therefore, reducing energy consumption can be suggested as a way to reduce pollution. Taking into account the effect of technology, two strategies can be proposed: firstly, the improvement of the technology of using fossil energies to increase energy efficiency and reduce pollution, and secondly, the use of renewable energy carriers and clean fuels.