Environment degradation, economic growth and energy consumption nexus: A wavelet-windowed cross correlation approach

• The aim is to analyse the causal relationship between CO2 emissions, EG and EC.
• We use a new technique namely wavelet windowed cross correlation.
• The results show significant uni/bidirectional causalities depending on the country.
• The results validate both the EKC as well as the feed-back hypothesis.

This paper analyzes the interactive linkages between carbon dioxide (CO22) emissions, energy consumption (EC) and economic growth (EG) using a novel approach namely wavelet windowed cross correlation (WWCC) for six oil-exporting countries from the GCC (Gulf Cooperation Council) region over the period 1980–2012. Our empirical results show that there exists a bidirectional causal relationship between EC and EG. However, the results support the occurrence of unidirectional causality from EC to CO22 emissions without any feedback effects, and there exists a bidirectional causal relationship between EG and CO22 emissions for the region as a whole. The study suggests that environmental and energy policies should recognize the differences in the nexus between EC and EG in order to maintain sustainable EG in the GCC region. Our findings will be useful for GCC countries to better evaluate its situation in the future climate negotiations. The overall findings will help GCC countries assess its position better in future climate change negotiations.