Examining the consumption of oil on total factor productivity and CO2 emissions: an analysis of highly oil-consuming countries

Purpose - This study aims to examine the impact of oil consumption on carbon dioxide (CO2) emissions and total factor productivity (TFP) in highly oil-consuming countries of the world from 1995 to 2019. Design/methodology/approach - For this purpose, fully modified ordinary least squares (FMOLS) and dynamic ordinary least squares (DOLS) are applied. Findings - FMOLS and DOLS models reveal that oil consumption, human capital, population, trade openness and nonrenewable energy have a significant positive effect on CO2 emissions. While information and communication technology (ICT), as proxied by mobile and natural resources, has a significant negative effect on CO2 emissions. In the case of TFP, oil consumption, ICT and natural resources have a significant positive effect on the TFP. On the other hand, trade openness, population, human capital and nonrenewable energy have a significant negative effect on TFP. The results of this study can help to provide policy recommendations to reduce CO2 emissions in studied highly oil-consuming countries of the world. Originality/value - Due to the threat to sustainable development, climate change has become a major topic for debate around the world. The influence of oil consumption on CO2 emission and TFP is less known in the available literature. Another significance of this study is that many researchers considered aggregate energy consumption to study this relationship, but the authors have studied the effect of energy consumption, particularly from oil in the top oil-consuming countries, which is a significant shortcoming of the present research.