Abstract
This paper examines the relationship between coal consumption and economic growth for 30 OECD (Organisation for Economic Co-operation and Development) countries and 32 non-OECD countries for 1990–2013 using a multivariate dependent panel analysis. For the analysis, we conducted the common factor defactorization process, unit root test, cointegration test, long-run cointegrating vector, and Granger causality test. Our results suggest the following: First, there is no long-run relationship between coal consumption and economic growth in OECD countries; however, in non-OECD countries, the relationship does exist. Second, excessive coal usage may hinder economic growth in the long run. Lastly, the growth hypothesis (coal consumption affects economic growth positively) is supported in the short run for non-OECD countries. As coal consumption has a positive effect on economic growth in the short run and a negative effect in the long run, energy conservation policies may have adverse effects only in the short run. Thus, non-OECD countries should gradually switch their energy mix to become less coal-dependent as they consider climate change. Moreover, a transfer of technology and financial resources from developed to developing countries must be encouraged at a global level.
Highlights
Climate change is a significant problem that has led to several efforts to reduce greenhouse gas emissions
We moved to the cointegrating equation and dynamic error correction for only the non-OECD group in order to describe the role of coal in economic growth for the non-OECD group, which has been established to have a long-run relationship
The results indicate that increases of 1% in coal consumption and labor force decrease economic growth by 0.038% and 0.159%, respectively, and a 1% increase in gross fixed capital formation results in a 0.234% increase in economic growth
Summary
Climate change is a significant problem that has led to several efforts to reduce greenhouse gas emissions. The Copenhagen Climate Change Conference in 2009 failed to achieve a binding accord This is a serious problem as there are no longer strong and binding restraints to greenhouse gas emissions. Coal is economical and relatively abundant, it can cause considerable environmental problems through, among other things, increasing greenhouse gas emissions [3]. For these reasons, it can be a good subject for implementing resource policies. We conducted this study to examine the causal relationship between coal consumption and economic growth for OECD (Organisation for Economic Co-operation and Development) and non-OECD countries.
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