International volatility transmission among income, CO₂ emission, non-renewable and renewable energy consumption: Which causes which and when?

This study analyses the evolution of volatility inter-connectedness in the global system of non-renewable and renewable energy consumption, economic growth, and CO2 emission. We find that the spillover effect accounts for a substantial portion of total volatility in this system. In particular, CO2 emission is the major net transmitter of volatility to economic growth. Moreover, this effect is observed to be most prominent for developed and high-income countries. The non-renewable energy sector, on the other hand, is the major net receiver of income volatility, particularly during economic crises and in low-income countries. Our findings suggest that future targets of non-renewable energy production can be implemented to reduce emissions without hampering long-term growth, and economic stability is crucial in fostering renewable energy investments in less developed economies.