Stochastic convergence of nitrogen oxides by fuel for OECD countries covering 1820–2019

Abstract

Addressing the challenges posed by pollutants is necessary to achieve the Sustainable Development Goals (SDGs) target 12 or achieve sustainable production and consumption patterns. Convergence assessment of air pollution provides information which can be beneficial to how to handle that air pollution across different countries. Nitrogen oxides (NO_x) are one of the most popular air pollutants. However, the current empirical literature on environmental economics largely ignores the convergence of per capita NO_x. For this reason, this study investigates the stochastic convergence of aggregate and fuel-specific per capita NO_x emissions in 20 OECD countries. This paper employs a recently introduced panel stationarity test that considers both smooth and sharp structural changes in the data generation process. The panel results show that the convergence hypothesis is rejected only for NO_x from light-oil consumption. However, country-specific results reveal substantial evidence for divergence in the sample countries when NO_x emissions per capita generated through diesel consumption, light-oil consumption, and natural gas consumption are considered. Besides, we find that most of the series have convergent behaviour for aggregate NO_x, NO_x from biomass consumption, NO_x from hard-coal consumption, NO_x from heavy-oil consumption, and NO_x from the process. The policy implications of the empirical results for proper environmental management are elucidated in the paper. Actions taken based on the convergence findings will likely lead to a decrease in NO_x emissions per capita as the countries will converge towards a lower level of NO_x emissions per capita, in line with SDG's target 12.