The effect of gross domestic product, urbanization, trade openness, financial development, and renewable energy on CO2 emission.

Abstract

The purpose of this study is to analyze the influence of GDP, urbanization, trade openness, financial development, and renewable energy consumption on CO2 emissions in Pakistan using yearly time series data from 1985 to 2018. The study utilized the cointegration technique and Granger causality for empirical estimation. The results of the study indicated that urbanization, financial development, and trade openness upsurge CO2 emission. Whereas using renewable energy resources is favorable for the environment and possesses negative relation with CO2 emission. All variables possess long-run relation with Co2 emission. Granger causality shows unidirectional causality from GDP and renewable energy to CO2 emission. The study contains insight for policymakers in Pakistan with beneficial policy recommendations to work toward a sustainable green environment.