The Impact of Energy Consumption and Economic Growth on Carbon Dioxide Emissions

Oluyomi A Osobajo,Afolabi Otitoju,Adekunle Oke,Martha Ajibola Otitoju

doi:10.3390/su12197965

Abstract

This study explored the effect of energy consumption and economic growth on CO2 emissions. The relationship between energy consumption, economic growth and CO2 emissions was assessed using regression analysis (the pooled OLS regression and fixed effects methods), Granger causality and panel cointegration tests. Data from 70 countries between 1994–2013 were analysed. The result of the Granger causality tests revealed that the study variables (population, capital stock and economic growth) have a bi-directional causal relationship with CO2 emissions, while energy consumption has a uni-directional relationship. Likewise, the outcome of the cointegration tests established that a long-run relationship exists among the study variables (energy consumption and economic growth) with CO2 emissions. However, the pooled OLS and fixed methods both showed that energy consumption and economic growth have a significant positive impact on CO2 emissions. Hence, this study supports the need for a global transition to a low carbon economy primarily through climate finance, which refers to local, national, or transnational financing, that may be drawn from public, private and alternative sources of financing. This will help foster large-scale investments in clean energy, that are required to significantly reduce CO2 emissions.

Highlights

Environmental issues have taken leading discussions in our contemporary times in both developing and developed economies due to environmental deterioration
Despite the contribution of industrialization in promoting economic growth by increasing the amount of goods and services produced, shaping lives and making the society a better place, it left us with an issue of increasing greenhouse emissions
According to Kasman and Dunman [7], a majority of the energy originates from fossil fuels such as coal and natural oil and gas, which has resulted in the increase of CO2 emissions level. This has further prompted scholars to argue that CO2 emission is invisible, and its effect may take years to materialise [8]. Several factors such as population size, the carbon intensity of energy, economic growth, clean nuclear energy use, fossil energy consumption, renewable energy, urbanization and other air pollutants (PM10, PM2.5, SO2, NO2, CO, B(a)P) [9,10] have been identified to be responsible for the growth in the global CO2 emissions level, the aim of this study is to explain the impact of energy consumption and economic growth on CO2 emissions

Summary

Introduction

Environmental issues have taken leading discussions in our contemporary times in both developing and developed economies due to environmental deterioration This further raises concerns about climate change and global warming, which arises mainly from the emission of greenhouse gases [1]. Scholars have argued that the increase in human activities due to the emergence of industrialization, the increase in the growth of the global population and the need to meet up with such transformations are the main causes of climate change [2,3] Human activities such as deforestation for agricultural and commercial purposes, burning of fossil fuel and changes in the use of land due to population growth are contributing significantly to a surge in greenhouse gas emissions. Despite the contribution of industrialization in promoting economic growth by increasing the amount of goods and services produced, shaping lives and making the society a better place, it left us with an issue of increasing greenhouse emissions

Objectives

Methods

Results