Economic growth and carbon emission in the Organization for Economic Cooperation and Development countries: The effects of oil, gas, and renewable energy

The world is stepping forward to a carbon-neutral economic system in response to the rising issues caused by climate change. Fossil fuel combustion is the primary source of increased carbon emissions, energy mix adjustment is critical to climate change mitigation and the carbon neutrality goal. This study investigates the different responses to energy sources' economic growth and environmental sustainability using balanced panel data from 34 Organization for Economic Cooperation and Development (OECD) countries during 1995-2019. This study uses oil, natural gas, and renewable energy to represent traditional, emerging alternative fossil, and green energy sources, respectively. Results show that renewable energy, oil, and natural gas all impose impacts on economic growth, however, renewable energy contributes more than oil and natural gas. Furthermore, there is a significant inverse relationship between the amount of renewable energy produced and carbon dioxide (CO2) emissions. While both natural gas and oil have a positive effect on CO2 emissions, the effect of natural gas is much smaller than that of oil. Furthermore, the causality investigation reveals that renewable energy, oil, and natural gas all show impacts on carbon emissions but do not contribute to economic growth. These findings suggest that increasing investment in renewable energy, with natural gas playing the role of a transitional replacement for oil, will contribute to the "carbon neutrality" process of these countries.