Persistence of CO 2 emissions in G7 countries: a different outlook from wavelet-based linear and nonlinear unit root tests.

Today, environmental issues such as the inability to control rising carbon dioxide (CO ₂ ) emissions, climate change, and global warming are on the agenda of policy-makers and various organizations. The Paris Agreement, signed in 2016 and rejoined by the USA in 2021, emphasizes the need for decarbonization and the importance of CO ₂ reduction for sustainable development. Since environmental policies can have long-term effects on variables containing unit roots, it is important for policy-makers to understand the stochastic properties of CO ₂ emissions. In this context, we propose a new wavelet-based nonlinear unit root test to investigate the stationary properties of the per capita CO ₂ emissions for the G7 countries during the period 1868-2014. To compare results, we use eight different tests that take into account both the time-frequency domain difference, the nonlinear-linear difference, and smooth structural breaks. The results of the different linear tests illustrate that CO ₂ emissions have a unit root in the frequency domain for all countries. Moreover, nonlinear unit root test results indicate that the CO ₂ emissions for the UK are stationary in the time domain. Overall, we consider frequency domain test results, and conclude that CO ₂ emission policies have permanent effects for G7 countries. Based on the findings, we recommend that the G7 countries take long-term measures to reduce CO ₂ emissions, such as joint actions to improve environmental quality through fossil fuel conservation, renewable energy improvement, and environmental awareness programs.
(© 2022. The Author(s), under exclusive licence to Springer-Verlag GmbH Germany, part of Springer Nature.)