Energy price shocks, fossil fuel dependence, and carbon emissions (CO₂): A multi-stage transmission framework analysis

Authors

1 Research Center for Scientific Foundations and Issues of Economic Development of Uzbekistan under the Tashkent State University of Economics, Tashkent, Uzbekistan

2 Tashkent State University of Economics, Tashkent, Uzbekistan

3 Samarkand State University named after Sharof Rashidov, University Boulevard, 15, Samarkand, 703004, Uzbekistan

4 International School of Finance Technology and Science, ISFT Institute, Tashkent, Uzbekistan

5 Namangan State Technical University, Namangan, Uzbekistan

6 Termez State Unversity, Termez, Uzbekistan

7 International Islamic Academy of Uzbekistan

8 Samarkand State Medical University, Samarkand, Uzbekistan

10.22124/cjes.2026.9635

Abstract

This paper investigates how energy price shocks are transmitted through energy consumption and fuel composition into carbon emissions, and how G7 carbon outcomes relate to global temperature dynamics, over the period 1991–2024. Using a balanced panel of 238 country-year observations for Canada, France, Germany, Italy, Japan, the United Kingdom and the United States, the analysis estimates a four-stage transmission chain: (i) energy price shocks to primary energy supply; (ii) energy price shocks to fossil fuel consumption; (iii) energy consumption composition to total  emissions; and (iv) aggregate G7 emissions to global temperature anomaly. Country fixed-effects models with Driscoll–Kraay standard errors are used for the panel stages, while Newey–West autocorrelation- and heteroskedasticity-consistent standard errors are used for the aggregate climate-stage time-series models. The results indicate that Brent oil price shocks are positively associated with G7 primary energy supply and, more weakly, with fossil fuel consumption, whereas natural gas and coal price shocks show no robust direct effects in the baseline panel. The carbon channel is considerably stronger: fossil fuel consumption and coal consumption are robust positive drivers of  emissions, while the renewable energy share significantly reduces emissions, particularly in the coal-channel and per-capita specifications. The aggregate climate stage shows that global temperature anomaly is highly persistent and trend-driven; once lagged temperature or a deterministic trend is included, contemporaneous G7 emissions lose explanatory power. The paper therefore frames its contribution as identifying a transmission mechanism – energy price shocks shape energy use, which in turn shapes emissions–rather than claiming a direct energy-price-to-temperature effect, and concludes that G7 decarbonisation, although necessary, is insufficient to explain global climate outcomes on its own.

Keywords

References

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Caspian Journal of Environmental Sciences
Volume 24, Issue 2
April 2026
Pages 495-515

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