Modeling the Contribution of Energy Consumption to Climate Change: A Panel Cointegration Analysis for Mediterranean Countries

Energy has certainly played a robust role in economic development. However, the damages it has caused to the environment and climate change are innumerable and difficult to identify. Therefore, the new challenge facing humanity is no longer the rise in energy prices or resources scarcity, but rather the climate crisis. Against this background, our paper aims to analyzing the long-run relationship between the energy sector and climate change phenomena for a panel of 14 Mediterranean countries spanning the period 1990-2019. The analysis was based on different econometric techniques, containing panel unit root tests, panel cointegration tests, and panel regression estimators, i.e., Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) estimators. The different findings revealed that energy consumption and various air quality indicators such as carbon dioxide emissions (CO2) and nitrous oxide emissions (N2O) have contributed to increasing greenhouse gas emissions (GHGs). This empirical investigation suggests that to minimize the spillovers of global warming and climate shift, the energy path in the Mediterranean should be adjusted by the implementation of energy efficiency measures and the advancement of renewable energy sources for reducing carbon emissions in order to preserve the environment for future generations.