Greenhouse gas emissions, energy consumption and economic growth: A panel cointegration analysis from Canadian industrial sector perspective

Abstract

This paper investigates the long-run and the causal relationship between greenhouse gas emissions, energy consumption and economic growth for Canadian industrial sectors over the period 1990–2007. The empirical findings suggest that in the long-run equilibrium, energy consumption has a positive and statistically significant impact on greenhouse gas emissions whereas a non-linear relationship is found between greenhouse gas emissions and economic growth, consistent with the environmental Kuznets curve. The short-run dynamics conveys that there is a unidirectional Granger causality running from energy consumption to greenhouse gas emissions; from economic growth to greenhouse gas emissions and a weak unidirectional causality running from greenhouse gas emissions to energy consumption; from economic growth to energy consumption. In the long-run however, there seems to be a weak one way causality flowing from energy consumption and economic growth to greenhouse gas emissions.