Effects of primary energy consumption on CO2 emissions under optimal thresholds: Evidence from sixty countries over the last half century

Highlights: • We examine the effects of different types of energy consumption on CO₂ emissions. • We estimate panel breaking regressions using data from 60 countries (1965–2016). • Five country groupings are identified using over 2600 observations. • Energy consumption influences emissions according to income or emission levels. • Some relatively high income countries can markedly cut emissions from coal and oil. -- Abstract: We examine how different types of primary energy consumption (i.e. oil, coal, gas, hydroelectric and other renewables) contribute to carbon dioxide emissions (CO₂) in the world. We allow the effects of each energy source on emissions to vary according to countries' real income or total emission levels. To achieve this, we use a panel breaking regression with four endogenously determined break points, employing time series (1965–2016) data across 60 major pollutant countries with over 2600 observations. Our analysis distinguishes between five optimally-determined country groupings at differing stages of industrialization, technology and scale, in terms of how they generate emissions from different fossil fuels. Our findings suggest that there exist different trade-offs from switching from one primary fuel source to another at different income levels and highlight how significant fuel-specific gains can be made by using other comparable economies as benchmarks.