A Dynamic Interrelationships among Clean Energy, Environmental Pollution, and Economic Growth in GCC Economies: A Panel ARDL Approach

Abstract

The paper investigates the interplay between clean energy, environmental pollution reduction, and economic growth in the Gulf Cooperation Council (GCC) countries from 1980 to 2019, utilizing the autoregressive distributed lag (ARDL) method. The study underscores the global transition towards cleaner energy sources and its implications for the region. In assessing the determinants of economic growth, the findings reveal a positive and significant short‐ and long‐term impact of energy production, with energy consumption exhibiting a positive and significant effect solely in the long term. The absence of a confirmed relationship in the short term is notable. Causality tests demonstrate a significant link from both energy consumption types to environmental pollution, alongside causal relationships from urbanization, energy production, and consumption to economic growth. Moreover, the results include the pivotal role of energy production in driving GDP growth, caution in short‐term energy consumption effects, and significant causal links between energy consumption and environmental pollution. The recommendations to incentivize sustainable energy production, engage in long‐term energy consumption planning, and adopt integrated urbanization policies provide actionable insights for policymakers. These suggestions are aimed at guiding the GCC countries in balancing the pursuit of economic growth with environmental sustainability—a delicate equilibrium that necessitates careful consideration of various factors.