Determinants of Industrial CO2 Emissions in the GCC: The Role of Energy Efficiency, Electricity Consumption, and Economic Factors

Devoting attention to the mechanisms of enhancing energy efficiency through the transition to clean energy sources plays a vital and active role in moving forward towards environmental sustainability in the industrial economy. Industrial CO2 emissions across the Gulf Cooperation Council (GCC) remain persistently high despite growing regional commitments to clean energy transition and sustainability. This study examines the key determinants of industrial CO2 emissions in all six GCC member states over the period 2004–2022, focusing on energy efficiency, electricity consumption, oil use, trade openness, and economic growth. The analysis employs advanced panel econometric techniques, including cross-sectional dependence tests, second-generation unit root tests, and panel autoregressive distributed lag estimators, to identify both short-run and long-run relationships among the variables. The results reveal that in the short run, energy intensity is the sole statistically significant driver of industrial emissions. In the long run, energy intensity continues to increase emissions, while trade openness significantly reduces them. Neither oil consumption nor industrial electricity use exerts a significant positive long-run effect on emissions, pointing to a gradual decoupling driven by improving industrial energy efficiency and cleaner electricity generation. These findings suggest an emerging decoupling between industrial activity and carbon emissions in the GCC, driven by improvements in energy efficiency. For GCC economies pursuing economic diversification and net-zero targets, reducing industrial energy intensity and expanding low-carbon energy sources remain critical pathways toward sustainable industrial development.