The nonlinearity and nonlinear convergence of CO 2 emissions: Evidence from top 20 highest emitting countries.

Carbon dioxide (CO ₂ ) is the most prevalent greenhouse gas that triggers climate change, which in turn leads to catastrophic effects on trade, business, human health, and other areas. Understanding the characteristics and tendency of CO ₂ emissions will improve policy making and mitigation strategies. Understanding the linearity or nonlinearity and convergence or divergence of CO ₂ emissions is essential for selecting appropriate modeling techniques and for designing reliable policies. Therefore, this paper investigates the nonlinearity and nonlinear convergence of CO ₂ emissions among the world's top 20 highest emitting countries, which account for 80% of the world's total emissions. To check the nonlinearity of CO ₂ emissions, the McLeod-Li nonlinearity test, the Terasvirta nonlinearity test, and the Brock-Dechert-Scheinkman-LeBaron nonlinearity test are employed. The convergence or divergence of CO ₂ emissions is checked by using the Kilic nonlinear unit root test, the Hu and Chen nonlinear unit root test, and the Park and Shintani nonlinear unit root test. The findings revealed that the CO ₂ emissions process in all the 20 countries is nonlinear; 17 countries exhibit convergence in CO ₂ emissions while the other 3 countries diverged from 1960 to 2018. Based on the results, the nonlinear nature of CO ₂ emissions requires special attention from scholars when selecting estimation techniques for CO ₂ emissions. For countries with convergence, emissions trends can be used to forecast future values of CO ₂ emissions. Moreover, strong policy actions are required to achieve convergence in the countries with divergence.
(© 2022. The Author(s), under exclusive licence to Springer-Verlag GmbH Germany, part of Springer Nature.)