Can efficient use of energy tackle the non-complementary linkages between natural resource reliance and environmental...

Natural resource-abundant countries often confront the issue of non-complementarity between natural resource reliance and environmental sustainability establishment. Hence, this study considers data from 38 natural resource-reliant countries from Africa and the Middle East to check if making efficient use of energy can tackle this non-complementary relationship. Precisely, this study explores whether energy efficiency gains would help these countries to directly reduce their per capita Carbon-dioxide (CO2) emission levels, and also indirectly exert emission-reducing impacts by offsetting CO2 emissions associated with more reliance on natural resources. Accordingly, annual data from 2001 to 2022 is used to conduct empirical exercises with methods robust against complex panel data-related problems. In a nutshell, the results obtained show that more natural resource reliance accounts for higher per capita CO2 emissions; thus, the issue of non-complementarity between natural resource reliance and environmental sustainability establishment is affirmed. Besides, the findings endorse that energy efficiency gains reduce CO2 emissions directly and also indirectly by offsetting the CO2 emission-enhancing effects associated with more natural resource reliance. Therefore, these findings duly certify the relevance of using energy resources efficiently to ensure a complementary relationship between natural resource reliance and environmental sustainability in the context of the selected countries. Apart from energy efficiency improvement, clean energy adoption and incoming foreign direct investment are identified as additional CO2 emission-reducing factors. Contrastingly, foreign trade participation, governance quality improvement, and urbanization are found to boost per capita CO2 emission levels. Furthermore, sensitivity analyses confirm that the above findings are sensitive to regional locations and national income levels of the concerned African and Middle Eastern countries. Hence, policymakers from these natural resource-reliant countries should consider these findings to design strategies through which sustainable environments can be established in the future.