Urbanization and non-renewable energy demand: A comparison of developed and emerging countries

Highlights: • Examining the impact of urbanization on non-renewable energy demand. • Results suggest the presence of cointegration with cross-sectional dependence. • Urbanization has the largest influence on non-renewable energy demand. • Urbanization has a higher impact in developed countries compared to emerging ones. • A bidirectional causality between urbanization and non-renewable energy consumption. -- Abstract: Much of the current literature that deals with the effect of urbanization on energy demand focuses only on a specific region or a single country. This research extends the current literature by concentrating on a sample of countries containing developed and emerging countries. Our study inspect for those countries the impacts of urbanization and other key determinants on demand of non-renewable energy during the period 1980–2014. In addition, this empirical research employs an advanced heterogeneous panel techniques such as Augmented Mean Groups (AMG). Our empirical results suggest that a one percent rises in urbanization rises the consumption of non-renewable energy by 0.72%. We find that (as compared to the effect of factors such as the GDP and the price of oil) urbanization has the largest effect on non-renewable energy demand.