Examining the Linkages among Carbon Dioxide Emissions, Electricity Production and Economic Growth in Different Income Levels

George E Halkos,Eleni-Christina Gkampoura

doi:10.3390/en14061682

Abstract

Our industrialized world highly depends on fossil fuels to cover its energy needs. Although fossil fuels have been linked with economic growth, their use has also been found to have severe impacts on the environment. The linkages among carbon dioxide emissions, energy consumption and economic growth have been extensively examined in the current literature. The present study focuses on electricity production from fossil fuels, as well as from renewable sources and examines their linkages with CO2 emissions and economic growth in 119 world countries of different income levels, by assessing Granger causality. In addition, the Environmental Kuznets Curve (EKC) hypothesis is tested, in order to evaluate whether economic growth and carbon dioxide emissions are linked with an inverse U-shaped relationship and with an N-shape relationship in higher income levels. The EKC hypothesis is confirmed for high income and upper-middle income countries, but not for lower-middle and low income levels and a bidirectional Granger causality is found between GDP per capita and CO2 per capita in all income levels.

Highlights

Our industrialized world highly depends on fossil fuels to cover its energy needs
The static model implies a positive monotonic relationship between GDP per capita and carbon dioxide emissions, while the dynamic model supports the existance of a U-shape relationship between the and 6 present the results of FE Driscoll-Kraay standard errors, as it was indicated by the two variables
In the case of environmental degradation and economic development, a variety of studies have been focusing on the Environmental Kuznets Curve hypothesis, which assumes that these two factors are linked with an inverse U-shaped relationship, while an N-shaped relationship is assumed to exist for high income countries

Summary

Introduction

Our industrialized world highly depends on fossil fuels to cover its energy needs. fossil fuels have been linked with economic growth, their use has been found to have severe impacts on the environment. Fossil fuels were the core of the new industrialized world and their use started growing rapidly, reaching millions of tons of oil equivalents by today [1] This excessive use and burning led to the emission of greenhouse gases (GHG) into the atmosphere which, in large amounts, contribute to global warming and climate change [2]. CO2 emissions that come from fossil fuel and industrial processes constitute 65% of total GHG emissions (according to 2010 data) [3] These emissions are expected to increase even more: global population is expected to rise to approximately 9 billion by 2050 [4] and, world energy consumption is expected to rise nearly 50% between 2018–2050 [5]

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