The Impact of Dirty and Clean Energy Consumption on Carbon Emissions in Azerbaijan

Abstract

. This study investigates the impact of dirty (gas, oil) and clean (renewable) energy consumption on CO emissions in Azerbaijan. Utilizing annual data from 1985 to 2022, the analysis examines the 2 stationarity of the variables using ADF, Flexible Fourier ADF, and Fractional Flexible Fourier ADF unit root tests, finding that all variables are stationary at the first difference. To explore the cointegration relationships among the variables, the Bayer-Hanck combined cointegration test is employed. Three econometric models are established, revealing a long-run equilibrium relationship solely between renewable energy consumption and carbon emissions (CO ). According to the long-run estimation re- 2 sults from FMOLS, DOLS, and CCR methods, renewable energy consumption negatively impacts carbon emissions in Azerbaijan, with a 1% increase in renewable energy consumption leading to a 0.60% decrease in carbon emissions. Additionally, the Fourier Toda-Yamamoto causality test uncovers a unidirectional causality from gas consumption to carbon emissions in Azerbaijan. The study concludes with policy recommendations for Azerbaijan to effectively manage and reduce carbon emissions