An econometric study of carbon dioxide (CO₂) emissions, energy consumption, and economic growth of Pakistan

Abstract

Purpose

The purpose of this paper is to examine the relationship among environmental pollution, economic growth and energy consumption per capita in the case of Pakistan. The per capital carbon dioxide (CO₂) emission is used as the environmental indicator, the commercial energy use per capita as the energy consumption indicator, and the per capita gross domestic product (GDP) as the economic indicator.

Design/methodology/approach

The investigation is made on the basis of the environmental Kuznets curve (EKC), using time series data from 1971 to 2006, by applying different econometric tools like ADF Unit Root Johansen Co‐integration VECM and Granger causality tests.

Findings

The Granger causality test shows that there is a long term relationship between these three indicators, with bidirectional causality between per capita CO₂ emission and per capita energy consumption. A monotonically increasing curve between GDP and CO₂ emission has been found for the sample period, rejecting the EKC relationship, implying that as per capita GDP increases a linear increase will be observed in per capita CO₂ emission.

Research limitations/implications

Future research should replace the economic growth variable, i.e. GDP by industrial growth variable because industrial sector is major contributor of pollution by emitting CO₂.

Practical implications

The empirical findings will help the policy makers of Pakistan in understanding the severity of the CO₂ emissions issue and in developing new standards and monitoring networks for reducing CO₂ emissions.

Originality/value

Energy consumption is the major cause of environmental pollution in Pakistan but no substantial work has been done in this regard with reference to Pakistan.

Citation

Hussain, M., Irfan Javaid, M. and Drake, P.R. (2012), "An econometric study of carbon dioxide (CO₂) emissions, energy consumption, and economic growth of Pakistan", International Journal of Energy Sector Management, Vol. 6 No. 4, pp. 518-533. https://doi.org/10.1108/17506221211282019