Examining carbon dioxide emissions, fossil & renewable electricity generation and economic growth: Evidence from a panel of South American countries

Abstract

This article explores the impact of electricity production broken down by energy source (fossils and renewables) on carbon dioxide emissions in South America over the 1980–2010 period. The contribution of the manuscript is in the analysis of the relationships between carbon dioxide emissions, the energy mix in electricity generation and its implications for economic growth in a region still insufficiently studied. Using ARDL approach, the empirical findings provide evidence of the cross-sectional dependence in the data and existence of cointegration. The pollution has a relationship with economic growth, and the fossil electricity in short-run. The estimations strongly reveal that renewable energy has a negative effect on CO2 emissions in long run. Also, in the long-run, fossil electricity has shown results become statistically insignificant. However, the adjustment mechanism corrected the model by around 27% in the following period. In this way, the electricity production at aggregate level is used a factor environmental pressure and as an indicator of economic activity in South America countries, where the renewable energy with an increasing long-run effect, remains an efficient substitute for the fossil-electricity. Thus, we recommend to the countries of South America that they maintain the long-term efforts to produce electricity from renewable sources.