A link between productivity, globalisation and carbon emissions: evidence from emissions by coal, oil and gas

Although much has been discussed about the link between renewable energy, globalisation and carbon dioxide (CO₂) emissions, yet the impact of total factor productivity (TFP) on CO₂ emissions is less known in the existing literature. Therefore, the present study considers TFP as one of the determinants of CO₂ as it is believed that technological enhancement plays an essential role in improving the environmental quality by raising efficiency in energy use and pollution treatment. In contrast, it may also have unfavourable impacts. In particular, this study analyses how TFP along with renewable energy and globalisation affect the aggregate and source of CO₂ emissions (oil, coal and gas) in the case of top ten carbon emitters from the developing economies over the period 1980-2018. To achieve the above objective, we use the second-generation panel unit root, cointegration and causality tests. We also implement a cross-sectional autoregressive distributed lag model (CS-ARDL) to find the long-run and short-run coefficients. Findings from panel cointegration tests show that there exists a significant long-run relationship between renewable energy, non-renewable energy, globalisation, total factor productivity and CO₂. Moreover, findings show that renewable energy consumption has a negative and significant impact on CO₂ emissions while non-renewable energy consumption significantly increases the CO₂ at aggregate and disaggregated levels. Further, our results confirm that TFP increases the CO₂ emissions whereas globalisation decreases CO₂. From the policy point of view, TFP growth needs to be accelerated to a higher level so that it enables low carbon growth. The slower TFP growth may enhance output which requires more energy and produces more emissions. Thus, there should be a promotion of emissions' reducing technology along with better TFP growth. Also, our findings recommend that CO₂ in sample countries can be reduced through promoting low carbon technology, and globalisation.