Energy consumption, CO2 emissions, and economic growth: An ethical dilemma

Chapter Seven - The relationship between financial openness, renewable and nonrenewable energy consumption, CO2 emissions, and economic growth in the Latin American countries: an approach with a panel vector auto regression model

This study examines the relationship between renewable and nuclear energy consumption, carbon dioxide emissions and economic growth by using the Granger causality and non-linear impulse response function in a business cycle in Spain. We estimate the threshold vector autoregression (TVAR) model on the basis of annual data from the period 1970–2018, which are disaggregated into quarterly data to obtain robust empirical results through avoiding a sample size problem. Our analysis reveals that economic growth and CO2 emissions are positively correlated during expansions but not during recessions. Moreover, we find that rising nuclear energy consumption leads to decreased CO2 emissions during expansions, while the impact of increasing renewable energy consumption on emissions is negative but insignificant. In addition, there is a positive feedback between nuclear energy consumption and economic growth, but unidirectional positive causality running from renewable energy consumption to economic growth in upturns. Our findings do indicate that both nuclear and renewable energy consumption contribute to a reduction in emissions; however, the rise in economic activity, leading to a greater increase in emissions, offsets this positive impact of green energy. Therefore, a decoupling of economic growth from CO2 emissions is not observed. These results demand some crucial changes in legislation targeted at reducing emissions, as green energy alone is insufficient to reach this goal.

Global warming is mainly influenced by factors such as energy consumption, human development, and economic activities, but there is no consensus among researchers and there is relatively little research literature on less developed countries. Therefore, this study attempts to explore the impact of renewable energy consumption, human development and economic growth on climate change from a macroeconomic perspective for 105 countries worldwide over the period 1990–2019 by constructing a panel vector autoregressive (PVAR) model and using generalized method of moments (GMM) and panel impulse response analysis. The analysis includes four panels of high-income, upper-middle-income, lower-middle-income, and low-income countries. The results of the study find that economic growth, FDI, trade openness, industrialization, renewable energy consumption and HDI have different impacts on climate change (CO2 emissions) in different regions during the sample period. Specifically, in the four panels, economic growth, industrialization, FDI, and trade openness all play a varied role in aggravating environmental pollution (CO2 emissions). In high-income and upper-middle-income countries, industrialization has a positive effect on CO2 emissions, while FDI has a negative impact, which supports the pollution halo hypothesis. However, both have a positive impact on CO2 emissions in lower-middle-income and low-income countries. The results also found that except for upper-middle-income countries, trade openness and renewable energy consumption help reduce CO2 emissions, while renewable energy consumption has little effect on suppressing CO2 emissions in low-income countries. In addition, HDI has promoted CO2 emissions in upper-middle-income and lower-middle-income countries, but has curbed CO2 emissions in high-income countries. Therefore, under the premise of not affecting economic growth and HDI, those empirical results will not only help decision-makers formulate appropriate renewable energy policies, but also are of great significance to the realization of a healthy and sustainable global environment.

Toward a sustainable environment: Nexus between CO2 emissions, resource rent, renewable and nonrenewable energy in 16-EU countries

This research work examines the nexus among renewable, non-renewable energy consumption, CO2 emissions, and economic growth in 26 European countries with data obtained from the World Bank database within the time period of 1990 to 2018. Firstly, unit root and panel cointegration approach analyses are conducted to test the stationary. The results indicate that there exists a long-run nexus among non-renewable, renewable energy, carbon-monoxide, and economic growth. Granger causality test was also used to explore the direction among economic growth, carbon emissions, and energy consumption. The results from this test are inconsistent, while it indicated bidirectional causality between economic growth and renewable energy consumption, there was also a unidirectional causality between renewable energy and non-renewable energy consumption as well as renewable energy and CO2 emissions. This result proves an interdependency and substitutability between both renewable and non-renewable sources of energy.

Chapter 17 - Is there an asymmetric causality between renewable energy and energy consumption in BIC countries?

In the extant literature, there are numerous discussions on China’s environmental sustainability. However, few scholars have considered renewable energy consumption and trade policy simultaneously to debate environmental sustainability. Therefore, this paper attempts to examine how renewable and non-renewable energy consumption, bio-capacity, economic growth, and trade policy dynamically affect the ecological footprint (a proxy for environmental sustainability). Using the data from 1971 to 2017 and employing the auto-regressive distributed lag model to perform an empirical analysis, the results demonstrate that renewable energy consumption and trade policy are conducive to environmental sustainability because of their negative impacts on the ecological footprint. However, the results also indicate that bio-capacity, non-renewable energy consumption, and economic growth are putting increasing pressure on environmental sustainability due to their positive impacts on the ecological footprint. Moreover, to determine the direction of causality between the highlighted variables, the Yoda-Yamamoto causality test was conducted. The results suggest a two-way causal relationship between renewable energy consumption and ecological footprint, non-renewable energy consumption and ecological footprint, and economic growth and ecological footprint. Conversely, the results also suggest a one-way causal relationship running from bio-capacity and trade policy to the ecological footprint.

Effective long-term planning becomes essential as Africa strives to expedite its shift to sustainable energy systems and comprehends how energy consumption and economic growth interact. This study examines the effects of total energy consumption, renewable energy consumption, and non-renewable energy consumption on economic growth in eight regional economic communities in Africa—AMU, CEN-SAD, COMESA, EAC, ECCAS, ECOWAS, IGAD, and SADC—between 1996 and 2022. Using panel data from the African regions, the Mean Group and Pooled Mean Group were utilised where applicable as indicated by the Hausman Test. The findings reveal that while both renewable and non-renewable energy consumption influence economic growth, their impacts vary across regions. Total energy consumption has a negative impact on economic growth in AMU, CEN-SAD, COMESA, ECCAS, and SADC blocs, but a positive impact on economic growth in ECOWAS and IGAD blocs, and an insignificant impact on the EAC bloc. While non-renewable energy consumption has a negative impact on economic growth in the AMU, COMESA, ECCAS, IGAD, and SADC blocs and a positive impact on economic growth in the EAC bloc, renewable energy consumption has a positive impact on economic growth in the AMU, COMESA, ECCAS, IGAD, and SADC blocs. These findings highlight the necessity of unique, region-specific energy planning approaches that give system resilience and investments in renewable energy top priority. Specifically, policymakers should expand energy access to underserved areas for the blocs experiencing positive impact of energy consumption, while those blocs experiencing negative impact should put in place policies to reduce energy waste and control energy prices to avoid volatility.

Dynamics between Financial Development, Renewable Energy Consumption, and Economic Growth: Some International Evidence

The causalities between carbon dioxide emissions, renewable and non-renewable energy consumption, economic growth, and urbanisation were examined for the panel of five countries (Argentina, Brazil, Paraguay, Uruguay, and Venezuela) from Southern Common Market, over thirty-five years (1980–2014), using a panel vector autoregression. The empirical analysis pointed to the existence of bi-directional causality between the consumption of fossil fuels, economic growth, consumption of renewable energy, and carbon dioxide emissions; and a uni-directional relationship between the consumption of renewable energy and urbanisation. The research also proves that the countries from Southern Common Market are dependent on fossil fuels consumption and that urbanisation process is highly linked with the consumption of this type of energy. Additionally, it was found that these countries have low renewable energy participation in their energy mix. Nevertheless, a substitutability effect between the consumption of renewable energy and the consumption of fossil fuels, as a possible response to periods of scarcity in reservoirs, was detected. Policymakers of Southern Common Market countries should speed up the deep reforms regarding renewable energy to mitigate environmental degradation.

This paper explores the relationship between economic growth, energy consumption (from fossil fuels and renewable sources), and CO2 emissions in the EU, highlighting the causal relationships between these variables. Through a Panel Vector Autoregressive (VAR) model and statistical test, it is found that fossil fuel consumption has a strong positive effect on CO2 emissions, while renewable energy has a milder negative effect. Granger causality tests confirm the significant causal relationship between fossil fuel consumption and CO2 emissions, highlight the positive impact of renewables on economic growth, showcase the link between economic growth and both emissions growth and renewable energy consumption. The findings emphasize the urgent need for a more aggressive shift towards renewable energy and enhanced energy efficiency to meet the EU's climate neutrality objectives. This study contributes critical insights for policymakers, emphasizing the importance of balancing economic growth with environmental sustainability by accelerating the transition to cleaner energy sources.

Is energy consumption effective to spur economic growth in Pakistan? New evidence from bounds test to level relationships and Granger causality tests

Energy efficiency potentially reduces global carbon emissions, whereas the need of emerging countries to maintain economic growth and development entails a sharp increase in energy consumption. However, to meet this, current energy systems need to be transformed. Several studies find different conclusions on the short-run and long-run relationship and the direction of causality, and none of the studies have considered energy efficiency in their model. This study investigates the direction of causality between energy efficiency, energy consumption, and economic growth in South Africa. To determine if a long-run relationship between the variables exists, the Johanson cointegration test is used, and the results indicate that there is a long-run relationship between economic growth, energy depletion, energy efficiency, non-renewable energy consumption, renewable energy consumption, and energy security, with trace statistics suggesting that the null hypothesis of no cointegration should be rejected at a 5% level of significance. The Toda and Yamamoto procedure of the Granger causality approach was then applied. This study finds a unidirectional causality between energy efficiency, non-renewable energy consumption, and economic growth and no causality between renewable energy consumption, energy depletion, energy security, and economic growth. The growth hypothesis is supported, while the neutrality hypothesis is only confirmed regarding renewable energy consumption and economic growth. The results further suggest that a unidirectional Granger causality exists between non-renewable consumption and energy efficiency, and economic growth in South Africa. In South Africa, energy efficiency is a significant tool to enhance sustainable growth and attain climate objectives. Also, energy efficiency helps to lower the costs of mitigating carbon emissions and further advance both social and economic development.

This study investigates the time-frequency nexus of carbon dioxide (CO2) emissions with economic growth, nonrenewable (i.e., coal, natural gas, and oil), and renewable (i.e., hydro and geothermal) energy consumption. In this context, BRICS countries (namely, Brazil, Russian Federation, India, China, and South Africa), which are leading emerging countries, are included, and quarterly data from 1990/Q1 to 2019/Q4 is used. The study employs the wavelet coherence (WC) approach to explore the co-movement between the variables at different frequencies. The empirical results show that (i) there is a strong and positive co-movement between CO2 emission and economic growth; however, it is weak for Russia and South Africa in the medium and long-term; (ii) coal energy consumption is strongly and positively co-moved with CO2 emission for all BRICS countries; (iii) natural gas energy consumption is strongly and positively co-moved with CO2 emissions in Brazil, India, and China; however, it is weakly and positively co-moved in Russia and South Africa; (iv) oil energy consumption is strongly and positively co-moved with CO2 emissions in Brazil, India, and China; however, it changes a bit for Russia and South Africa; (v) hydro energy consumption is weakly and positively co-moved with CO2 emissions in general, whereas country-based results vary; (vi) geothermal energy consumption is also similar to hydro energy consumption. Thus, the WC results highlight the strong co-movement of economic growth and nonrenewable energy consumption with CO2 emissions, whereas renewable energy consumption has a relatively lower co-movement. Based on the results, policy implications are also discussed for BRICS countries.

Analyzing the linkage between renewable and non-renewable energy consumption and economic growth by considering structural break in time-series data