The impact of sources of energy production on globalization: Evidence from panel data analysis

Greenhouse gas (GHG) emission is one of the major reasons for global warming and climate change. Among various sources responsible for GHG emission, energy generation is found to be the leading one. Increased economic activities facilitated by the ever-expanding level of globalization lead to substantial accumulation of GHG in the atmosphere. Hence, the relationship between economic growth and environmental degradation remains a primary concern to policymakers as well as concerned stakeholders. This study aims at investigating the relationship between the sources of energy production – fossil sources and renewables, and the level of globalization. A panel data consisting of 26 countries from the list of Annex I Parties to the United Nations Framework Convention on Climate Change (UNFCCC) for 21 years has been analyzed. The study finds that an increase in the electricity production from fossil based sources, i.e. oil and coal, reduces the level of globalization. It also supports the argument that coal is more detrimental to the environment. Moreover, this study finds a significant negative influence of the use of renewables for energy production on the level of globalization. This finding supports the premise that renewable energy is used domestically and works as import substitute for energy demand leading to a negative effect on globalization. Further study in developing countries with larger sample may help compare and contrast the effect of sources of energy on globalization.

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