The Non-linear impact of renewable energy and trade on Consumption-based carbon emissions

Abstract

One of the most pressing issues in today’s society is environmental pollution. The principal source of historically high global carbon emissions (CO2) in the atmosphere is human-caused anthropogenic activities based on non-renewable energy sources. As a result, renewable energy systems have emerged as an alternative source of energy that is seen to be less harsh than fossil energy supplies, drawing substantial economic, environmental, and technological attention during the last decade. Our study aims to analyze the non-linear impacts of renewable energy used by human and their trading with each other on consumption-based CO2 for the Pakistan’s economy. The study covers the period from 1990 to 2019 and employed the non-linear autoregressive distributive lag model (NARDL) for assessing the non-linear impacts of renewable energy on consumption-based CO2. As NARDL provides the best results when there is a non-linear relationship between the variables of analysis, as well as their stationary at the different levels and on first difference. Our results show that there exists asymmetry in consumption-based CO2 association with renewable energy consumption and trade. The positive shocks in renewable forms (oil and gas) of energy consumption and negative shock in trade increase consumption-based CO2 emissions. This implies that policymakers can promote non-renewable energy distributed and environmentally-friendly trade for conserving the environment for future generations.