Analyzing the EKC hypothesis for the top 10 energy-importing countries: a perspective for the COP27 targets

Abstract

The environmental Kuznets curve (EKC) has been analyzed in many studies, but none of them has focused on countries with high energy imports. COP27 reiterated that fossil fuels are the main cause of carbon dioxide (CO2) emissions and highlighted the importance of net-zero targets for CO2 reduction by 2050. Analyzing the determinants of CO2 emissions in countries that import a lot of fossil energy is an important issue for achieving the net-zero targets within the scope of COP27. The study therefore empirically analyzes the effects of resource rents, energy prices, urbanization, and income on CO2 emissions. To this end, the study uses second-generation panel data analyses for the top 10 energy-importing countries for the period 1990-2020. The results suggest that (i) natural resources rent and urbanization increase CO2 emissions; (ii) an increase in energy prices helps to achieve carbon neutrality goals; (iii) GDP has a U-shaped link with CO2 emissions; and (iv) the EKC hypothesis is not valid for energy import-dependent countries. These findings suggest that energy import-dependent countries should strive for COP27 goals by adopting green urbanization policies, resource rent regulation laws, and energy price adjustments in domestic markets that accompany the transition to clean energy.