Do Oil Price, Renewable Energy, and Financial Development Matter for Environmental Quality in Oman? Novel Insights from Augmented ARDL Approach

Abstract

As an oil-exporting country, Oman traditionally relies on oil sources to meet its energy demand. The country has not been able to safeguard its environment from carbon emissions (CO2)-related adversities. In this context, this study evaluated the impacts of the price of oil, financial development, economic growth, and nonrenewable energy on the environmental quality in Oman. The research used the recently developed augmented autoregressive distributed lag (ARDL) approach to investigate annual data from 1980 to 2018. The outcomes revealed the following: (i) financial development negatively affected ecological quality in the short and long term; (ii) oil prices positively impact carbon emissions in the long term; however, the price of oil does not significantly influence CO2 emissions in the short term; (iii) nonrenewable energy is harmful for ecological quality over both the short and long term; (iv) there is a causal link among financial development, nonrenewable energy, and carbon emissions. The current research outcomes present valuable findings for Oman’s policymakers in heading toward sustainable financial and energy sectors.