Assessment of Determinants of Energy Intensity in OECD Countries Through Second-Generation Panel Data Analysis Methods

This study investigates the effect of electricity consumption on air pollution in Türkiye at the provincial level through spatial analyses. Using SO2 and PM10 measurements as indicators of air pollution, this study incorporates income, population density, and electricity consumption as explanatory variables. The direct and indirect effects of economic factors are analyzed using a spatial Durbin model on annual data from 2008 to 2021. Our results provide strong evidence of spillovers from both air pollution and economic determinants in neighboring provinces. Electricity consumption has a significant positive direct effect on air pollution. Foremost, a 1% increase in electricity consumption results in a 0.57% rise in SO2 levels and a 0.16% rise in PM10 levels within the province. Additionally, it causes a 1.1% rise in PM10 levels in neighboring provinces due to spillover effects. In conclusion, our recommendations involve boosting incentives for renewables to mitigate the impact of electricity consumption on air pollution. Furthermore, the upcoming establishment of a mandatory carbon market in Türkiye necessitates spatial considerations in carbon pricing, especially in high-pollution clusters.