The impact of trade, urbanization and biomass energy consumption on CO2 emissions: results from a panel of emerging and frontier countries

The paper investigates the long-run relationship among CO2 emissions, biomass and waste, economic growth, urbanization, trade openness and energy consumption in a balanced panel of 21 emerging and frontier countries over the period 1973- 2014. We first check the stationarity properties of the time-series under investigation. Then, we adopt an ARDL model to shed light on long-run Granger causality among the abovementioned variables. We find that there exists a cointegrated relationship between environmental degradation, per capita GDP, trade openness, and total energy consumption. CO2 emissions are, as expected, positively associated with energy consumption, economic growth as well as trade openness. On the contrary, biomass energy use and urbanization are negatively associated with CO2 emissions. Causality analysis reveals that only trade openness and urbanization are exogenous variables, while the others are endogenously determined. Hence, in emerging and frontier countries, urbanization appears to reduce both energy and economic growth as well as pollution, while trade openness plays an opposite role.