Does the Environmental Kuznets Curve Hypothesis Hold in Libya? An Extended Econometric Analysis of Economic Growth and CO₂ Emissions

Abstract

This study examines the validity of the Environmental Kuznets Curve (EKC) hypothesis in the Libyan economy by analyzing the dynamic relationship between economic growth and CO₂ emissions over the period 1980–2024, within a broader sustainable development framework. The study employs both the Autoregressive Distributed Lag (ARDL) model and its nonlinear extension (Nonlinear ARDL - NARDL), allowing for the estimation of short-run and long-run relationships, as well as testing for cointegration using the Bounds Test. In addition, the model captures potential asymmetric effects of economic growth on environmental degradation. The results indicate the existence of a long-run equilibrium relationship among the variables, with evidence supporting the nonlinear form of the Environmental Kuznets Curve hypothesis. However, the estimated turning point exceeds the current income level, suggesting that Libya remains at a stage where economic growth is associated with increasing environmental degradation. Energy consumption is found to be the main driver of CO₂ emissions, while trade openness and urbanization are statistically insignificant. Moreover, no significant asymmetric effects are detected between positive and negative changes in economic growth. These findings highlight the importance of integrated economic and environmental policies aimed at improving energy efficiency and promoting a transition toward cleaner energy sources.