THE RELATIONSHIP BETWEEN ECONOMIC GROWTH, ENERGY CONSUMPTION AND CO₂ EMISSIONS IN EURASIAN COUNTRIES: A PANEL ANALYSIS BASED ON THE EKC APPROACH

Abstract

This study examines the relationship between economic growth, energy consumption, renewable energy use, and carbon dioxide (CO₂) emissions in 12 Eurasian countries over the period 2000–2024. The study employs the Environmental Kuznets Curve (EKC) framework to evaluate the relationship between economic growth and environmental quality and thereby determine the direction of the energy–growth nexus. Both Panel Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) methods are applied to estimate long-run relationships. In addition, the Dumitrescu–Hurlin panel causality test is employed to determine the direction of causality. The empirical findings reveal the existence of an inverted U-shaped relationship between economic growth and carbon emissions. The turning point of the EKC is estimated to occur at an income level of approximately USD 37,000 per capita. The results also demonstrate a positive and statistically significant relationship between energy consumption and carbon emissions, providing evidence that economic growth remains energy-intensive. In contrast, renewable energy consumption is found to significantly contribute to emission reduction, emphasizing the importance of transforming the energy structure to achieve environmental sustainability.The causality analysis indicates the existence of a bidirectional causal relationship between energy consumption and economic growth. Furthermore, strong unidirectional causality is identified from energy consumption to carbon emissions, indicating that increased energy demand directly intensifies environmental pressure. The findings suggest that energy consumption is the principal driver of carbon emissions, while economic growth indirectly exacerbates this process. Overall, the study concludes that the level of development is a key determinant shaping the emissions trajectory in Eurasian countries. While developed countries have entered a stage of emission reduction, developing countries continue to experience carbon-intensive economic growth. Therefore, promoting sustainable economic development requires increasing investments in renewable energy sources, enhancing energy efficiency, and implementing integrated policies that address the energy–climate nexus.