Carbon emissions, energy consumption, trade openness and economic growth in 12 Asia-Pacific economies: evidence from panel co-integration results

Abstract

This article analyses the relationships among carbon emissions, energy consumption, trade and economic growth in 12 Asia-Pacific economies. The results indicate the existence of four long-run equilibrium relationships among carbon emissions, energy consumption, trade and economic growth. These four variables are causally related to each other. The inverted-U environment Kuznets hypothesis is supported. The long-run elasticity of carbon emissions with respect to trade and energy consumption were 0.21 and 1.13, respectively. Furthermore, the empirical evidence from a dynamic panel error-correction model revealed two short-run unidirectional causalities: from trade to energy consumption and from energy consumption to GDP growth. The short-run results also showed two bidirectional causal relationships between energy consumption and carbon emissions and between economic growth and carbon emissions. These results suggest that Asia-Pacific economies undertake energy policy to reduce carbon emissions by increasing the energy efficiency and substantially increasing the share of renewable energy in the overall energy usage.