Revisiting the Environmental Kuznets Curve under Vision 2030 Reforms

Abstract

This dissertation examines whether the Environmental Kuznets Curve (EKC) hypothesis holds in Saudi Arabia by analyzing the relationship between carbon dioxide (CO2) emissions, economic growth, energy consumption, and technological innovation over the period 1990–2022. An autoregressive distributed lag (ARDL) econometric framework is employed and carefully estimated, supported by unit root and cointegration testing, using annual national data. Policy and structural shifts are accounted for through two dummy variables capturing the Kyoto Protocol (1997–1999) and the launch of Vision 2030 (post-2016). The results confirm the presence of a long-run cointegrating relationship among the variables. However, there is no evidence of the inverted-U pattern predicted by the EKC. Instead, the estimates indicate a U-shaped relationship, with CO2 emissions increasing alongside economic growth at higher income levels, reflecting the persistent reliance on fossil fuels in the Saudi economy. Energy consumption emerges as the dominant long-run driver of emissions. Innovation, proxied by annual patent counts, exerts only a limited short-run effect, suggesting that the diffusion of green technologies has yet to influence emissions trajectories meaningfully. The findings confirm that economic growth alone will not achieve environmental improvements, requiring targeted reforms. Expanding renewable energy capacity and strengthening the Saudi Energy Efficiency Program across sectors are essential to lower carbon intensity. Developing human capital is equally important, as the transition demands skilled labor and technological capacity. Energy price reform, including cost-reflective pricing and carbon charges, would discourage wasteful consumption. Finally, strong international collaboration is needed to reinforce domestic efforts and align fully with Saudi Arabia’s long-term climate commitments