An econometric study of energy consumption, carbon emissions and economic growth in South Asia: 1972-2009

Publication Date29 Jul 2014
AuthorHarishankar Vidyarthi
SubjectPublic policy & environmental management,Environmental technology & innovation
An econometric study of energy
consumption, carbon emissions
and economic growth in South
Asia: 1972-2009
Harishankar Vidyarthi
Department of Management Studies,
National Institute of Financial Management, Faridabad, India
Purpose – The purpose of this paper is to empirically examine the relationship between energy
consumption, carbon emissions and economic growth for a panel of five South Asian economies
namely India, Pakistan, Bangladesh, Sri Lanka and Nepal over the period 1972-2009 within
multivariate framework.
Design/methodology/approach – The study uses Pedroni cointegration and Granger causality test
based on panel vector error correction model to examine long-run equilibrium relationship and
direction of causation in short run and long run betwe en energy consumption, carbon emissions
and economic growth in South Asia.
Findings – Cointegration result indicates the long-run equilibrium relationship between economic
growth, energy consumption and carbonemissions for panel. Causality resultssuggest that bidirectional
causality exist between energy consumption-GDP, and unidirectional causality from carbon emissions
to GDP and energy consumption in long run. However, energy consumption causes carbon emissions
in short run.
Practical implications – Implementing energy efficiency measures and reducing dependence on
fossils fuels by scaling up carbon free energy resources like nuclear, renewables including hydropower
in energy mix is necessary for sustainable and inclusive growth in the region.
Originality/value – South Asia economies need to sacrifice economic growth for reducing the carbon
emissions in long run if the region dependence on fossils fuels including coal, oil and natural gas in
energy mix continues at same pace.
Keywords Carbon emissions, Economic growth, Causality, Energy consumption, South Asia,
Panel VECM
Paper type Research paper
1. Introduction
Environmental pollution, global warming and extreme climate change primarily due to
ever-increasing carbon dioxide and other greenhouse gas emissions[1] has become major
concern worldwide. Carbon dioxide alone accounts for nearly 60 per cent greenhouse ga s
emitted to the atmosphere. Acting on this concer n, international communities through
Kyoto Protocol in 1997 called for reduction of greenhouse gas emissions in 37 developed
(Annex 1) economies to 5.20 per cent lower than 1990 level during 2008-2012.
This came in to effect from 2005. However, Kyoto protocol does require monitoring
and reporting GHG emissions without reducing GHG emissions for developing
(Non-Annex 1) economies and further notified by Doha conference – 2012. Although all
South Asian countries including India, Pakistan, Bangladesh, Sri Lanka and Ne pal
have ratified the Kyoto protocol (currently ratified by more than 190 countries) to
reduce emissions levels as it allow to access the technology transfer and related foreign
investments for adaptation projects.
The current issue and full text archive of this journal is available at
WorldJour nal of Science, Technology
and Sustainable Development
Vol. 11 No. 3, 2014
pp. 182-195
rEmeraldGroup PublishingLimited
DOI 10.1108/W JSTSD-08-2013-0037

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