The spatial spillover effect of fossil fuel energy trade on CO2 emissions

We diagnose CO2 emission changes and determine the driving mechanisms and spatial spillover effect worldwide using spatial econometric techniques embedded within energy trade in the period 2000–2014. We focus on fossil fuel import, taking it as the medium through which to examine the spatial spillover effect on CO2 emissions, and compare the spatial influence between developed and developing countries. We propose different hypotheses considering the magnitude of spatial influence through fossil fuel trade between developed countries, between developing countries, and between developed and developing countries. These hypotheses are manifested in the multiple spatial econometric model. Results revealed general heterogeneity of CO2 emissions among different countries alongside fluctuations and wavy increments in the analyzed groups of countries. However, the convergence of emissions was predictable because the growth rate of CO2 emissions was low in countries with high levels of CO2 emission and converged rapidly with that of developed countries. The spatial autocorrelation phenomenon and spatial spillover effects generated from energy trade have previously only been verified worldwide rather than solely in developed countries or developing countries. Urbanization, industrial development, deforestation and GDP growth all drive the increase in CO2 emissions whereas renewable energy options can help to mitigate emission increases.