Assessing the role of production capacity in mitigating carbon emissions: a case study of Algeria

This study examines the relationship between productive capacity and CO2 emissions in Algeria, addressing the pressing challenge of sustainable development in the context of climate change. The aim is to explore how enhancing production capacity can influence environmental outcomes, particularly in terms of carbon emissions. To achieve this, the study employs an Auto Regressive Distributed Lag (ARDL) model, with results validated through an Error Correction Model (ECM), using data from 1990 to 2023. The findings reveal that improvements in productive capacity contribute to a long-term reduction in CO2 emissions per capita. However, an increase in energy consumption has the potential to undermine these gains, underlining the need for greater energy efficiency. Key policy recommendations suggest prioritizing investments in energy-efficient technologies, thereby enhancing Algeria’s productive capacity while minimizing environmental impact. This framework provides a valuable pathway for aligning economic growth with sustainable environmental practices, offering actionable insights for policymakers aiming to balance development with climate goals.