The Dynamic Nexus of Fossil Energy Consumption, Temperature and Carbon Emissions: Evidence from Simultaneous Equation Model

Abstract

With the continuous increase in global fossil energy consumption, carbon dioxide emissions and the greenhouse effect have gradually increased. This study uses a simultaneous equations model to explore the dynamic nexus of fossil energy consumption, temperature, and carbon emissions in OECD and non-OECD countries, with panel data from 2004 to 2019. The results show that the improvement of international competitiveness has reduced the frequency of extreme weather in OECD and non-OECD countries, significantly reducing fossil energy consumption in non-OECD countries and carbon emissions in OECD countries. Sustainable economic growth has significantly reduced fossil energy consumption in OECD countries but increased carbon emissions, especially in non-OECD countries. In addition, in the short term, the improvement of international competitiveness has significantly reduced fossil energy consumption and carbon emissions in OECD and non-OECD countries. In the long term, the improvement of international competitiveness has a greater impact on reducing fossil energy consumption and carbon emissions in non-OECD countries and has a significant impact on reducing the frequency of extreme weather in OECD countries. Moreover, the long-term impacts of sustainable economic growth on fossil energy consumption and carbon emissions are more significant.