Renewable Energy Consumption and Carbon Emissions: Evidence from an Oil-Rich Economy

This article examines the influence of renewable energy consumption, real GDP per capita, exports and imports on consumption-based CO2 emissions in Azerbaijan from 1993 to 2019 by employing the Dynamic Ordinary Least Squares Method (DOLS). The results reveal that renewable energy consumption has a negative impact on CO2 emissions, while real GDP per capita has a positive effect. According to the findings, a 1% increase in renewable energy consumption leads to a 0.26% decrease in consumption-based CO2 emissions, while a 1% rise in real GDP per capita leads to a 0.46% rise in consumption-based CO2 emissions. In addition, imports and exports show positive and negative effects respectively. Numerically, a 1% rise in imports results in a 0.18% rise in CO2 emissions, whereas a 1% increase in exports reduces CO2 emissions by 0.16%. This is consistent with expectations and theoretical outcomes described in the functional specification and data section. The negative influence of renewable energy consumption, as well as the larger effect of imports, emphasize the necessity of implementing ecologically friendly measures in both energy sectors (particularly, the need to increase the share of renewable energy in total energy use) and international trade.