Energy, Economic Growth and Pollution Mitigation

The first part of this thesis examines the contribution of natural gas consumption in the real GDP of Saudi Arabia using long-span and recent time series data over the period 1968-2016 in a multivariate framework which incorporates total trade as an additional variable. Using the Autoregressive Distributed Lag method of cointegration, we found a long-run cointegration equilibrium relationship between NGC, total trade, and real GDP, with a positive significant relationship among the variables. By applying the Toda and Yamamoto method to Granger causality testing, we found a one-sided causality running from NGC to real GDP; while between real GDP and trade, NGC and total trade and total trade and real GDP are without a feedback. From our empirical results, we suggest that natural gas conservation policy would hurt the demand for natural gas, hinder total trade, and thus, retard domestic output in the long-run. However, in the near future, it is possible for the Saudi Arabian government to meet energy needs and enhance total trade by adopting renewable energy alternatives to natural gas. Results, however, upon which the policy implications are inferred should be applied with caution as they may not be feasible enough to justify the adoption of unappealing energy policy choice for Saudi Arabia. The second part of this dissertation, confirms the existence of a positive and significant long-run nexus among environmental sustainability, renewable energy consumption and economic growth in the EU-28 countries for the period of 1995- 2015. Using Dumitrescu and Hurlin (2012) Granger non-causality in heterogeneous panel, the result shows a long-run bidirectional causal relationship among renewable energy consumption, economic growth and other growth determinants. In addition, empirical results indicates real gross fixed capital formation, carbon emissions and other environmental factors are principal determinants of long-run growth in the EU. Based on these results, we infer that the exploitation of renewable energy sources in the EU-28 countries is a reliable pathway toward environmental pollution mitigation. Consequently, achieving sustainable development goals (SDGs) by the year 2030 through renewable energy consumption and carbon emission mitigation is very much achievable in the EU-28 countries, and should also be adopted by all countries as an effective global policy.