Abstract This study examines the impact of energy consumption and the CO2 emissions on economic growth using simultaneous-equation models with panel data for 58 countries over the period 1990–2012. Our empirical results show that energy consumption has a positive impact on economic growth. This implies that energy consumption played an important role in the increase of economic growth in the investigated economies but with the consequence of high pollution. Since energy is an important ingredient for economic growth, strong energy policies are required to realize economic growth. On the other hand, the CO2 emissions have a negative impact on economic growth.