Environmental degradation,economic growth and energy consumption: Evidence of the environmental Kuznets curve in Malaysia

This paper tests for the short and long-run relationship between economic growth, carbon dioxide (CO₂) emissions and energy consumption, using the Environmental Kuznets Curve (EKC) by employing both the aggregated and disaggregated energy consumption data in Malaysia for the period 1980–2009. The Autoregressive Distributed Lag (ARDL) methodology and Johansen–Juselius maximum likelihood approach were used to test the cointegration relationship; and the Granger causality test, based on the vector error correction model (VECM), to test for causality. The study does not support an inverted U-shaped relationship (EKC) when aggregated energy consumption data was used. When data was disaggregated based on different energy sources such as oil, coal, gas and electricity, the study does show evidences of the EKC hypothesis. The long-run Granger causality test shows that there is bi-directional causality between economic growth and CO₂ emissions, with coal, gas, electricity and oil consumption. This suggests that decreasing energy consumption such as coal, gas, electricity and oil appears to be an effective way to control CO₂ emissions but simultaneously will hinder economic growth. Thus suitable policies related to the efficient consumption of energy resources and consumption of renewable sources are required.     

Energy consumption and economic growth: Evidence from China at both aggregated and disaggregated levels

Using a neo-classical aggregate production model where capital, labor and energy are treated as separate inputs, this paper tests for the existence and direction of causality between output growth and energy use in China at both aggregated total energy and disaggregated levels as coal, oil and electricity consumption. Using the Johansen cointegration technique, the empirical findings indicate that there exists long-run cointegration among output, labor, capital and energy use in China at both aggregated and all three disaggregated levels. Then using a VEC specification, the short-run dynamics of the interested variables are tested, indicating that there exists Granger causality running from electricity and oil consumption to GDP, but does not exist Granger causality running from coal and total energy consumption to GDP. On the other hand, short-run Granger causality exists from GDP to total energy, coal and oil consumption, but does not exist from GDP to electricity consumption. We thus propose policy suggestions to solve the energy and sustainable development dilemma in China as: enhancing energy supply security and guaranteeing energy supply, especially in the short run to provide adequate electric power supply and set up national strategic oil reserve; enhancing energy efficiency to save energy; diversifying energy sources, energetically exploiting renewable energy and drawing out corresponding policies and measures; and finally in the long run, transforming development pattern and cut reliance on resource- and energy-dependent industries.     

The causal relationship between energy resources and economic growth in Brazil

This study investigates the causal relationship between clean and non-clean energy consumption and economic growth in Brazil over the period of 1980–2009. Clean energy consumption at aggregated level of total renewable energy consumption and disaggregated levels of hydroelectric, new renewables, and nuclear energy consumption are tested within a production function framework. A cointegration test reveals a long-term equilibrium relationship between real output, capital, labor, and renewable and non-renewable energy consumption at aggregated level, and a long-term equilibrium relationship between real output, capital, labor, and hydroelectric/new renewables/nuclear and fossil fuel energy consumption at disaggregated level. The capital, labor, and new renewables elasticities of real output are positive and statistically significant, other energy consumption item's elasticities are insignificant. The results from error correction model reveal the interdependencies between new renewables, nuclear, fossil fuel, and total non-renewable energy consumption and economic growth, the unidirectional causality from hydroelectric/total renewable consumption to economic growth, the substitutability between new renewables and fossil fuel consumption, and the substitutability between new renewables and nuclear energy consumption. Additionally, nuclear and new renewables energy consumption responds to bring the system back to equilibrium. Overall, aggregated analysis may obscure the relationship between different types of clean energy consumption and economic growth.     

CO2 emissions,energy consumption and economic growth in Turkey

This paper examines the long run and causal relationship issues between economic growth, carbon emissions, energy consumption and employment ratio in Turkey by using autoregressive distributed lag bounds testing approach of cointegration. Empirical results for Turkey over the period 1968–2005 suggest an evidence of a long-run relationship between the variables at 5% significance level in Turkey. The estimated income elasticity of carbon emissions per capita is ?0.606 and the income elasticity of energy consumption per capita is 1.375. Results for the existence and direction of Granger causality show that neither carbon emissions per capita nor energy consumption per capita cause real GDP per capita, but employment ratio causes real GDP per capita in the short run. In addition, EKC hypothesis at causal framework by using a linear logarithmic model is not valid in Turkish case. The overall results indicates that energy conservation policies, such as rationing energy consumption and controlling carbon dioxide emissions, are likely to have no adverse effect on the real output growth of Turkey.     

Are global warming and economic growth compatible? Evidence from five OPEC countries?

In this paper, we investigate the relationship between carbon emissions, income, energy and total employment in selected OPEC countries for the period of 1971–2002. We mainly focus on the link between energy use and income. Employing the autoregressive distributed lag (ARDL) approach, we find that there is a cointegrating relationship between the variables in Saudi Arabia only. The long run forcing variables for income are determined to be employment and energy for Saudi Arabia. In Indonesia, Algeria, Nigeria, and Venezuela, there is no cointegration between income and energy. Secondly we question the long run Granger causality between carbon emissions, energy use, and income. Our results suggest that none of the countries need to sacrifice economic growth to decrease their emission levels. Indonesia and Nigeria may contribute to emissions reduction via energy conservation without negative long run effects on economic growth.     

Environmental Kuznets Curve hypothesis in Pakistan: Cointegration and Granger causality

The paper is an effort to fill the gap in the energy literature with a comprehensive country study of Pakistan. We investigate the relationship between CO₂ emissions, energy consumption, economic growth and trade openness in Pakistan over the period of 1971–2009. Bounds test for cointegration and Granger causality approach are employed for the empirical analysis. The result suggests that there exists a long-run relationship among the variables and the Environmental Kuznets Curve (EKC) hypothesis is supported. The significant existence of EKC shows the country's effort to condense CO₂ emissions and indicates certain achievement of controlling environmental degradation in Pakistan. Furthermore, we find a one-way causal relationship running from economic growth to CO₂ emissions. Energy consumption increases CO₂ emissions both in the short and long runs. Trade openness reduces CO₂ emissions in the long run but it is insignificant in the short run. In addition, the change of CO₂ emissions from short run to the long span of time is corrected by about 10% yearly.     

Panel estimation for CO2 emissions,energy consumption,economic growth,trade openness and urbanization of newly industrialized countries

This paper empirically examines the dynamic causal relationships between carbon dioxide emissions, energy consumption, economic growth, trade openness and urbanization for the panel of newly industrialized countries (NIC) using the time series data for the period 1971–2007. Using four different panel unit root tests it is found that all panel variables are integrated of order 1. From the Johansen Fisher panel cointegration test it is found that there is a cointegration vector among the variables. The Granger causality test results support that there is no evidence of long-run causal relationship, but there is unidirectional short-run causal relationship from economic growth and trade openness to carbon dioxide emissions, from economic growth to energy consumption, from trade openness to economic growth, from urbanization to economic growth and from trade openness to urbanization. It is found that the long-run elasticity of carbon dioxide emissions with respect to energy consumption (1.2189) is higher than short run elasticity of 0.5984. This indicates that over time higher energy consumption in the newly industrialized countries gives rise to more carbon dioxide emissions as a result our environment will be polluted more. But in respect of economic growth, trade openness and urbanization the environmental quality is found to be normal good in the long-run.     

Examining carbon emissions economic growth nexus for India: A multivariate cointegration approach

The study probes cointegration and causality between carbon emissions and economic growth for India using ARDL bounds testing approach complemented by Johansen–Juselius maximum likelihood procedure in a multivariate framework by incorporating energy supply, investment and employment for time span 1971–2006. The study fails to establish long-run equilibrium relationship and long term causality between carbon emissions and economic growth; however, there exists a bi-directional short-run causality between the two. Hence, in the short-run, any effort to reduce carbon emissions could lead to a fall in the national income. This study also establishes unidirectional short-run causality running from economic growth to energy supply and energy supply to carbon emissions. The absence of causality running from energy supply to economic growth implies that in India, energy conservation and energy efficiency measures can be implemented to minimize the wastage of energy across value chain. Such measures would narrow energy demand–supply gap. Absence of long-run causality between carbon emissions and economic growth implies that in the long-run, focus should be given on harnessing energy from clean sources to curb carbon emissions, which would not affect the country’s economic growth.     

CO2 emissions,energy consumption and economic growth in China: A panel data analysis

This paper examines the causal relationships between carbon dioxide emissions, energy consumption and real economic output using panel cointegration and panel vector error correction modeling techniques based on the panel data for 28 provinces in China over the period 1995–2007. Our empirical results show that CO₂ emissions, energy consumption and economic growth have appeared to be cointegrated. Moreover, there exists bidirectional causality between CO₂ emissions and energy consumption, and also between energy consumption and economic growth. It has also been found that energy consumption and economic growth are the long-run causes for CO₂ emissions and CO₂ emissions and economic growth are the long-run causes for energy consumption. The results indicate that China's CO₂ emissions will not decrease in a long period of time and reducing CO₂ emissions may handicap China's economic growth to some degree. Some policy implications of the empirical results have finally been proposed.     

CO2 emissions,energy consumption,and output in France

This paper examines the dynamic causal relationships between pollutant emissions, energy consumption, and output for France using cointegration and vector error-correction modelling techniques. We argue that these variables are strongly inter-related and therefore their relationship must be examined using an integrated framework. The results provide evidence for the existence of a fairly robust long-run relationship between these variables for the period 1960–2000. The causality results support the argument that economic growth exerts a causal influence on growth of energy use and growth of pollution in the long run. The results also point to a uni-directional causality running from growth of energy use to output growth in the short run.     

Oil prices,nuclear energy consumption,and economic growth: New evidence using a heterogeneous panel analysis

This paper applies panel data analysis to examine the short-run dynamics and long-run equilibrium relationships among nuclear energy consumption, oil prices, oil consumption, and economic growth for developed countries covering the period 1971–2006. The panel cointegration results show that in the long run, oil prices have a positive impact on nuclear energy consumption, suggesting the existence of the substitution relationship between nuclear energy and oil. The long-run elasticity of nuclear energy with respect to real income is approximately 0.89, and real income has a greater impact on nuclear energy than do oil prices in the long run. Furthermore, the panel causality results find evidence of unidirectional causality running from oil prices and economic growth to nuclear energy consumption in the long run, while there is no causality between nuclear energy consumption and economic growth in the short run.     

The long-run and causal analysis of energy,growth, openness and financial development on carbon emissions in Turkey

The aim of this paper is to examine the causal relationship between financial development, trade, economic growth, energy consumption and carbon emissions in Turkey for the 1960–2007 period. The bounds F‐test for cointegration test yields evidence of a long-run relationship between per capita carbon emissions, per capita energy consumption, per capita real income, the square of per capita real income, openness and financial development. The results show that an increase in foreign trade to GDP ratio results an increase in per capita carbon emissions and financial development variable has no significant effect on per capita carbon emissions in the long- run. These results also support the validity of EKC hypothesis in the Turkish economy. It means that the level of CO₂ emissions initially increases with income, until it reaches its stabilization point, then it declines in Turkey. In addition, the paper explores causal relationship between the variables by using error-correction based Granger causality models.     

Environment Kuznets curve for CO2 emissions: A cointegration analysis for China

This study examines the long-run relationship between carbon emissions and energy consumption, income and foreign trade in the case of China by employing time series data of 1975–2005. In particular the study aims at testing whether environmental Kuznets curve (EKC) relationship between CO₂ emissions and per capita real GDP holds in the long run or not. Auto regressive distributed lag (ARDL) methodology is employed for empirical analysis. A quadratic relationship between income and CO₂ emission has been found for the sample period, supporting EKC relationship. The results of Granger causality tests indicate one way causality runs through economic growth to CO₂ emissions. The results of this study also indicate that the carbon emissions are mainly determined by income and energy consumption in the long run. Trade has a positive but statistically insignificant impact on CO₂ emissions.     

The role of globalization on the recent evolution of energy demand in India: Implications for sustainable development

Using annual data for the period 1971–2012, this study explores the relationship between globalization and energy consumption for India by endogenizing economic growth, financial development and urbanization. The cointegration test proposed by Bayer–Hanck (2013) is applied to estimate the long-run and short-run relationships among the variables. After confirming the existence of cointegration, the overall results from the estimation of an ARDL energy demand function reveal that in the long run, the acceleration of globalization (measured in three dimensions — economic, social and overall globalization) leads to a decline in energy demand in India. Furthermore, while financial development is negatively related to energy consumption, economic growth and urbanization are the key factors leading to increased energy demand in the long run. These results have policy implications for the sustainable development of India. In particular, globalization and financial development provide a win–win situation for India to increase its economic growth in the long run and become more environmentally sustainable.     

Oil consumption, CO2 emission and economic growth in MENA countries

This study examines the impact of oil consumption on the economic growth of the MENA countries during the period 1980–2009. The panel model is employed in this study. Based on the cointegration test results, it was found that CO₂ emission, and oil consumption has a long run relationship with economic growth. Moreover, there is also a bi-directional Granger causality between oil consumption, CO₂ emission and economic growth in both the short run and the long run. The results of this study show clearly that oil consumption plays an important role in the economic growth of the MENA countries.     

The long-term relationship between CO2 emissions and economic activity in a small open economy: Uruguay 1882–2010

The long-term relationship between carbon dioxide (CO₂) emissions from energy use and economic activity level is estimated for Uruguay between 1882 and 2010. We include CO₂ emissions both in levels and in per capita terms, which allows to analyze if a decoupling exists both in absolute and in relative terms. We also test for the functional form of the relationship, something that is usually missed in the literature, but which is very relevant, because a misspecification could lead to biased estimates. We apply cointegration techniques and estimate a vector error correction model (VECM) for testing whether these variables are endogenous over the long-term while also considering the short-term dynamics. The economic productive structure, the degree of openness, and the share of clean sources in the total energy supply are also considered as explanatory variables. In addition, other variables that measure changes in the economic structure are included to check for robustness of the estimates. The results show that there is a linear relationship (when a log-log transformation is employed) between CO₂ emissions and per capita economic activity level (which would involve an exponential relationship between the non-transformed variables). Moreover, we cannot reject the level-log model, indicating that emissions increase at a decreasing rate in reference to the increase in economic level activity. Emissions increase jointly with the industrial sector's participation in the total output, as a consequence of the intensity of this activity in the consumption of energy from fossil fuel sources. The degree of openness is inversely related to CO₂ emissions. This is because the periods of major opening were based on primary input exports, which are lower in energy intensity than industrial products. The changes in CO₂ emission are inversely related to the variation in the share of clean sources in the total energy supply. Finally, all the variables included in the cointegration vector are endogenous, adjusting together to the deviations from the long-term relationship. As a consequence of the above, economic growth appears not to be enough for diminishing Uruguayan emissions in the long term. Changes in the energy matrix should be encouraged, and emissions reduction should come not through energy constraints but through the development of clean sources, or improvements in energy use efficiency, given the impact of energy on the economic activity level.     

Environmental Kuznets Curve for carbon emissions in Pakistan: An empirical investigation

This study investigates the relationship between carbon emissions, income, energy consumption, and foreign trade in Pakistan for the period 1972–2008. By employing the Johansen method of cointegration, the study finds that there is a quadratic long-run relationship between carbon emissions and income, confirming the existence of Environmental Kuznets Curve for Pakistan. Moreover, both energy consumption and foreign trade are found to have positive effects on emissions. The short-run results have, however, denied the existence of the Environmental Kuznets Curve. The short-run results are unique to the existing literature in the sense that none of the long-run determinants of emissions is significant. The contradictory results of short- and long-run give policy makers the opportunity to formulate different types of growth policies for the two terms taking environmental issues into consideration. In addition, the uni-directional causality from growth to energy consumption suggests that the policy makers should not only focus on forecasting future demand for energy with different growth scenarios but also on obtaining the least cost energy. Furthermore, the absence of causality from emissions to growth suggests that Pakistan can curb its carbon emissions without disturbing its economic growth.     

Electricity consumption,CO2 emission,and economic growth in the Middle East

This study examines the impact of electricity consumption on the economic growth in the Middle East countries during the period 1990–2008. The panel model is used in this study. Based on the cointegration test results, it is found that CO₂ emission and electricity consumption have a long-run relationship with economic growth. Moreover, there is also a bi-directional Granger causality between electricity consumption, CO₂ emission, and economic growth in both the short run and the long run. The results of this study show clearly that electricity consumption plays an important role in the economic growth of the Middle East countries.     

Dynamic relationship between CO2 emissions,energy consumption and economic growth in three North African countries

This paper investigated the causal relationship between energy consumption (EC), carbon dioxide (CO₂) emissions and economic growth for three selected North African countries. It uses a panel co-integration analysis to determine this econometric relationship using data during 1980–2012. Recently developed tests for panel unit root and co-integration tests are applied. In order to test the Granger causality, a panel Vector Error Correction Model is used. The conservation hypothesis is found; the short run panel results show that there is a unidirectional relationship from economic growth to EC. In addition, there is a unidirectional causality running from economic growth to CO₂ emissions. A unidirectional relationship from EC to CO₂ emissions is detected. Findings shown that there is a big interdependence between EC and economic growth in the long run, which indicates the level of economic activity and EC mutually influence each other in that a high level of economic growth leads to a high level of EC and vice versa. Similarly, a unidirectional causal relationship from EC to CO₂ emissions is detected. This study opens up new insights for policy-makers to design comprehensive economic, energy and environmental policy to keep the economic green and a sustainable environment, implying that these three variables could play an important role in the adjustment process as the system changes from the long run equilibrium.     

Growth and renewable energy in Europe: A random effect model with evidence for neutrality hypothesis

This is an empirical study on the causal relationship between economic growth and renewable energy for 27 European countries in a multivariate panel framework over the period 1997-2007 using a random effect model and including final energy consumption, greenhouse gas emissions and employment as additional independent variables in the model. Empirical results do not confirm causality between renewable energy consumption and GDP, although panel causality tests unfold short-run relationships between renewable energy and greenhouse gas emissions and employment. The estimated cointegration factor refrains from unity, indicating only a weak, if any, relationship between economic growth and renewable energy consumption in Europe, suggesting evidence of the neutrality hypothesis, which can partly be explained by the uneven and insufficient exploitation of renewable energy sources across Europe.