Energy Consumption, Co2 Emission, and Economic Growth: Evidence from Chile

Abstract

This article investigates the short- and long-run causality issues among energy consumption, CO2 emissions, and economic growth in Chile by using time series techniques and annual data for the 1965–2010 period. The results of unit root, co-integration, and Granger-causality tests based on an error-correction model indicate the existence of unidirectional causality from energy consumption to economic growth, from CO2 emissions to economic growth, and from energy consumption to CO2 emissions. However, there was no unidirectional causality from economic growth to energy consumption, from CO2 emissions to energy consumption, and from economic growth to CO2 emissions. These results suggest that energy consumption can induce economic growth but not vice versa. In addition, Chile is dependent on carbon energy consumption for its rapid economic growth, causing considerable CO2 emissions. This suggests that Chile should make more effort to develop energy-efficient technologies and renewable energy sources to achieve green growth based on lower CO2 emissions.