Carbon Emissions in the GCC: Can Information and Communication Technologies Investment Drive Environmental Sustainability?

This paper examines the determinants of carbon dioxide (CO2) emissions across the Gulf Cooperation Council (GCC) countries over the period 2000–2022. The GCC region presents a distinctive empirical setting, characterized by high fossil fuel dependency, among the highest per capita CO2 emission rates globally, and ambitious national sustainability agendas. Despite the region’s environmental significance, empirical evidence on the combined role of digitalization, investment flows, demographic pressures, and renewable energy in driving GCC emissions remains limited. This study examines these factors together, unlike much of the existing GCC literature, taking into account cross-sectional dependence and heterogeneity across GCC economies. The analysis considers the association of foreign direct investment, economic growth, energy use, information and communication technologies, population, and renewable energy with CO2 emissions and environmental sustainability. A balanced panel dataset from the World Bank is employed to examine both the short-run dynamics and long-run associations. To account for cross-sectional dependence and heterogeneity, the study applies second-generation panel econometric techniques, including the Cross-sectionally Augmented Dickey–Fuller (CADF) equation, the Cross-sectionally Augmented IPS (CIPS) test, Westerlund cointegration tests, and the Cross-Sectional Autoregressive Distributed Lag (CS-ARDL) model, complemented by Dumitrescu–Hurlin causality and fixed-effects instrumental-variable robustness analyses. The empirical findings show that energy use, population, and economic growth are positively associated with CO2 emissions. ICT is negatively associated with CO2 emissions in the CS-ARDL estimates; however, this relationship becomes statistically insignificant when ICT is treated as endogenous in the IV robustness analysis, indicating that it should not be interpreted as a causal emission-reduction effect. Renewable energy and foreign direct investment do not show statistically significant associations in the main CS-ARDL estimates. The causality results further indicate predictive causality from CO2 emissions to ICT, reinforcing the possibility of reverse causality. These findings carry important policy implications for GCC policymakers seeking to align economic development with environmental sustainability and long-term climate commitments.