Modelling the Asymmetric Relationship Between Urbanization, Energy Consumption and CO2 Emissions: A Study of Income Classified Economies

This study investigates how CO2 emissions behave with the increase or decrease in urbanization and energy consumption, employing pooled ordinary least square (OLS) estimator on a panel of 137 countries from 1961–2019. The findings indicate that there is asymmetry between the process of urbanization, energy consumption and CO2 emissions. From a global perspective, the asymmetry of urbanization on CO2 emissions is more prominent than energy consumption, although CO2 emissions are more responsive towards energy consumption in symmetric cases. For low-income economies, urbanization does not exhibit any significant impact on carbon emission, but energy consumption does. For lower-middle income economies, a lower level of urbanization has a greater impact on CO2 emission than an increase in urbanization, but carbon emissions are more reactive towards energy consumption. Moreover, both urbanization and energy consumption posit a significant impact on carbon emission for upper-middle income economies. Therefore, environment-friendly urbanization and efficient energy consumption should be prioritized to offset the negative externalities.