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Are global warming and economic growth compatible? Evidence from five OPEC countries?

In this paper, we investigate the relationship between carbon emissions, income, energy and total employment in selected OPEC countries for the period of 1971-2002. We mainly focus on the link between energy use and income. Employing the autoregressive distributed lag (ARDL) approach, we find that there is a cointegrating relationship between the variables in Saudi Arabia only. The long run forcing variables for income are determined to be employment and energy for Saudi Arabia. In Indonesia, Algeria, Nigeria, and Venezuela, there is no cointegration between income and energy. Secondly we question the long run Granger causality between carbon emissions, energy use, and income. Our results suggest that none of the countries need to sacrifice economic growth to decrease their emission levels. Indonesia and Nigeria may contribute to emissions reduction via energy conservation without negative long run effects on economic growth. (C) 2008 Elsevier Ltd. All rights reserved.