Modelling the impact of energy production on environmental quality of resource-rich countries

This study examines the influence of energy production on environmental degradation in resource-rich countries, utilising the pooled mean group (PMG) estimator technique spanning from 1995 to 2021. Our analysis revealed that while energy production does contribute to CO2 emissions, its impact was statistically insignificant. This suggests the potential for implementing advanced and environmentally friendly techniques in the production process. Furthermore, the study suggests that the bulk of emissions in oil-producing countries may stem from sources other than energy production, such as oil extraction itself. Our findings support the halo effect hypothesis (HEH), indicating that foreign direct investment (FDI) is associated with a reduction in CO2 emissions in the sampled region. Considering these results, policymakers should prioritise environmentally friendly policies to attract FDI inflows in countries like Nigeria. This includes encouraging investors to embrace green energy technologies and align their investments with the country's emission reduction targets. [Received: May 18, 2023; Accepted: May 8, 2024]