The relationship between CO 2 emission, economic growth, energy consumption, and urbanization in the ECO member countries

Carbon dioxide (CO 2 ) is the most critical factor affecting climate change and is a severe threat to human health. The Economic Cooperation Organization (ECO) member countries have unsuitable situation in terms of CO 2 emission. The main aim of this paper is to investigate the relationship between CO 2 emission, economic growth, energy consumption, and urbanization in the ECO member countries during 1990–2014. To this end, suitable dynamic panel data approaches such as Fully Modified Ordinary Least Squares ( FMOLS ), two-stage Engels-Granger , and Dumitrescu–Hurlin ( DH ) causality, were implemented based on a proper econometric procedure. Results confirmed the validity of the Environmental Kuznets Curve ( EKC ) for the ECO in the short and long run. The turning point was estimated as $ 6057.76. According to the DH causality approach, there is a two-way causal relationship between CO 2 and economic growth, CO 2 and urbanization, energy consumption and economic growth, and energy consumption and urbanization. According to the Paris Agreement, if fossil fuel consumption is reduced by 20%, per capita carbon emissions will be reduced by 19.6%. To achieve this goal, it is suggested that besides increasing fossil fuel taxes, ECO countries be supported technologically, financially and capitally by developed countries in terms of replacing fossil fuels with clean energy sources. Considering the significant effect of urbanization on CO 2 emission, providing welfare and financial facilities in the rulers is recommended to prevent migration. Introducing the solar panel technology instead of transferring electricity to rulers will be an efficient strategy to target costs and reduce CO 2 emission.