A multiscale reassessment of the Environmental Kuznets Curve for energy and CO2 emissions

This paper investigates the environmental Kuznets' curve hypothesis for total primary energy supply and CO2 from fuel combustion over the period 1971-2015. Our analysis has two distinguishing features. Firstly, it adopts a robustness approach by (a) using both parametric and semi-parametric methods, and (b) analysing different geographical scales. Secondly, it strictly adheres to the EKC narrative by (a) not using control variables and (b) taking Energy and CO2 in absolute rather than in per capita terms, which is consistent with the fact that Nature cares about absolute pressures. We show how evidence for EKC changes depending on the model specification, the sample, and the used variables. Hence, this paper contributes to explaining why the literature on the EKC gives mixed results. The multiscale perspective and some theoretical considerations, however, tell how to perform the analysis appropriately. Thus, we can affirm that, both for CO2 and Energy, the fragile evidence of EKC that was emerging at the end of the last century has vanished with the new wave of globalization. There is only evidence of decreasing elasticities for very-high income countries. Interestingly, the great recession might have produced structural reductions in TPES and CO2 in the affected countries. Finally, the case of Germany, which shows EKC patterns, indicates that active energy policies can reduce energy and CO2 without harming the economy.