The role of CO2 emissions and economic growth in energy consumption: empirical evidence from Belt and Road and OECD countries

Energy economics literature indicates that CO2 emissions and economic growth are significant drivers of energy consumption. This paper empirically tests the claim described above within the context of the Belt and Road Initiative countries and the Organisation for Economic Co-operation and Development countries. Prais-Winsten regression estimates the models with panel corrected standard errors. The random effects and fixed effects estimators proved inefficient, while the panel corrected standard errors proved to be an efficient and appropriate estimator. The results are consistent with the usual drivers indicated in the literature; both CO2 emissions and economic growth positively and significantly affect energy consumption in all the eight panels, including the Belt and Road Initiative panel and the Organisation for Economic Co-operation and Development panel. CO2 emissions on energy consumption are 10.7% higher in the Organisation for Economic Co-operation and Development countries than in the Belt and Road Initiative countries. Similarly, economic growth on energy consumption is 9.4% higher in the Organisation for Economic Co-operation and Development countries than in the Belt and Road Initiative countries. Policy recommendations in the study include improving and implementing an energy diversification policy, introducing carbon taxes and adopting new technologies like carbon capture and storage. These policies aim to encourage renewable and green energy usage and transition to low carbon technologies to reduce CO2 emissions while maintaining sustainable economic growth.