CO2 Emissions, Energy Consumption, Economic Growth, Trade, and Urbanization in Greece

Abstract

The objective of this study is to explore the relationship between energy consumption, carbon dioxide (CO2) emissions, urbanization, trade, and economic growth of Greece, in the environmental Kuznets curve (EKC) model, for the period 2000–2017. We investigate this relationship using the vector error correction model (VECM) and we employ the Granger causality technique in order to explore the presence of causality among the examined variables. The long-run results confirm bidirectional causal relationships between economic growth and CO2 emissions, as well as between CO2 emissions and trade openness. In addition, there exist unidirectional Granger causalities that run from energy consumption to trade and from urbanization to CO2 emissions. In the short run, the results reveal that there is a causal relationship between economic growth and urbanization, with direction from economic growth and urbanization. The Greek government is advised to emphasize on the use of renewable energy and clean technologies of renewable energy in order to achieve lower levels of emissions.