Dynamic nexus between non-renewable energy consumption, economic growth and CO2 emission: A comparison analysis between major emitters

Abstract

Non-renewable energy fosters economic growth, whilst simultaneously it serves as the primary source of carbon dioxide (CO2) emissions. Using data from the world's three major carbon emitters over the period 1980–2020, this paper adopts the non-linear autoregressive distributed lag (NARDL) approach to explore the dynamic nexus between energy consumption, economic growth and CO2 emissions. The results reveal that energy consumption matters for economic growth. From a short-term perspective, an increase in oil consumption positively impacts economic growth in the United States and India, whereas a negative shock solely affects China's economic growth. Regarding coal consumption, a positive shock only affects the US's economic growth, while China and India are more likely to be affected by a negative consumption shock. In the long run, the nexus between oil consumption and economic growth exhibits a similar asymmetric pattern in China and the United States. Concerning the effect of coal consumption on economic growth, only negative shocks count for China and positive shocks for the United States. The findings also identify various patterns of energy consumption on CO2 emissions. An increase in oil consumption, whether from a short- or long-run perspective, increases CO2 emissions in all three countries, while a decrease in oil consumption only mitigates CO2 emissions in China and the United States. There are more complicated patterns to the role of coal consumption in CO2 emissions. The results vary significantly from country to country; however, energy consumption has generally promoted economic growth as well as resulted in environmental issues that cannot be disregarded.