Fossil fuel dependence and environmental sustainability: Insights from SDGs 7 and 13 in gulf economies

Abstract

This study presents the first empirical unification of the Environmental Phillips Curve (EPC) and Tragedy of the Commons (TOC) frameworks in fossil-fuel-dependent Gulf Cooperation Council (GCC) economies. Employing a Cross-Sectional Autoregressive Distributed Lag approach on data from 2000 to 2023, the analysis accounts for cross-sectional dependence and slope heterogeneity across GCC states. The results show that a 1% increase in non-renewable energy capacity raises CO 2 emissions by 8.09%, quantitatively confirming the carbon lock-in mechanism central to the TOC framework. Conversely, foreign direct investment (FDI) significantly improves ecological balance ( β  = 0.0248), supporting the pollution halo hypothesis, whereas unemployment reduces CO 2 emissions but presents complex trade-offs for broader ecological health. Financial development and economic globalisation are shown to degrade environmental quality. These findings provide robust empirical validation for both theoretical frameworks: the EPC is confirmed through nuanced unemployment–environment dynamics in the GCC's segmented labour market, and the TOC is operationalised via carbon lock-in effects. The study advances theoretical integration and offers actionable policy insights to reconcile economic development with ecological sustainability in resource-dependent regions, thereby advancing Sustainable Development Goals 7 (Affordable and Clean Energy) and 13 (Climate Action) through green investment and transition strategies.