Submitted Successfully!
To reward your contribution, here is a gift for you: A free trial for our video production service.
Thank you for your contribution! You can also upload a video entry or images related to this topic.
Version Summary Created by Modification Content Size Created at Operation
1 Energy consumption and economic growth impact CO2 emissions. Hence, future studies should therefore focus on creating awareness and promoting investment in different renewable energy sources.
Oluyomi Osobajo
 + 840 word(s) 840 2020-09-27 14:13:22 |
2 format correct
Conner Chen
 + 29 word(s) 869 2020-10-26 03:48:43 |

Video Upload Options

Do you have a full video?
Send video materials Upload full video

Confirm

Are you sure to Delete?
Yes No
Cite
If you have any further questions, please contact Encyclopedia Editorial Office.
Osobajo, O.A.; Otitoju, A.; Otitoju, M.A.; Oke, A. Economic Growth and CO2. Encyclopedia. Available online: https://encyclopedia.pub/entry/2338 (accessed on 19 April 2024).
Osobajo OA, Otitoju A, Otitoju MA, Oke A. Economic Growth and CO2. Encyclopedia. Available at: https://encyclopedia.pub/entry/2338. Accessed April 19, 2024.
Osobajo, Oluyomi A., Afolabi Otitoju, Martha Ajibola Otitoju, Adekunle Oke. "Economic Growth and CO2" Encyclopedia, https://encyclopedia.pub/entry/2338 (accessed April 19, 2024).
Osobajo, O.A., Otitoju, A., Otitoju, M.A., & Oke, A. (2020, October 04). Economic Growth and CO2. In Encyclopedia. https://encyclopedia.pub/entry/2338
Osobajo, Oluyomi A., et al. "Economic Growth and CO2." Encyclopedia. Web. 04 October, 2020.
Economic Growth and CO2
Edit
This entry is adapted from the peer-reviewed paper 10.3390/su12197965

This entry 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.

climate change climate finance economic growth CO2 emissions energy consumption

1. Overview of Greenhouse Gas Emissions

       Greenhouse gases have been categorised as atmospheric gaseous constituents, both anthropogenic and natural. These constituents are known to imbibe and emit radiation at certain wavelengths within the spectrum of infrared radiation emitted by the clouds, atmosphere and the surface of the Earth. Hossain [11] and Paiva et al. [12] asserted that greenhouse gases remain a significant cause of climate change and global warming. This is consistent with Resnik’s [13] argument that the adverse effects of climate change due to greenhouse gases on human health, the environment and society are profuse. Hence, Meltzer [14] concluded that over 150,000 deaths per year are attributed to the resultant effects of environmental pollution. Although there are many greenhouse gases, CO2 is attracting more recognition due to its persistence in the atmosphere and for its use as a baseline for estimating the global warming potential (GWP) of other greenhouse gases [15][16][17]. Rahman [18] added that between 1990 to 2013, the greenhouse gas concentration has increased by 34% with over 80% of this figure being a resultant effect of CO2 emissions. This is in line with Amri’s [19] assertion that CO2 emissions have increased significantly from 67 million metric tons to 134 million metric tons. Considering that the rising CO2 emission level remains a global concern [18][20], it is crucial to explore the drivers of CO2 emissions [21][22]. Based on previous studies (Table 1), one could conclude that energy consumption and economic growth are the two most mentioned drivers of CO2 emissions.

Table 1. Drivers of CO2 emissions (summarised from the literature).

Authors CO2 Emissions Drivers
Stolyarova [23] GDP and energy consumption.
Sharma [24] Per capita GDP and urbanization.
Cetin and Ecevit [25] Energy consumption and urbanization.
Keho [26] The share of industrial sector in GDP, per capita income and trade openness.
Zakarya et al. (2015) [27] GDP, energy consumption and Foreign direct investments.
Ab-Rahim and Xin-Di [28] Energy consumption, trade openness and economic growth.
Jiang and Guan [29] GDP per capita, population, carbon intensity of energy and GDP energy intensity.
Jiang et al. [30] Social consumption and consumption behaviour.
Talbi [9] Economic growth, population size, fossil energy consumption, clean nuclear energy use, renewable energy and waste energy conversion.
Wang and Lin [10] Urbanization, energy structure, GDP and energy intensity

2. Economic Growth and CO2

       In recent times, several studies have focused on understanding the link between energy consumption, economic growth and CO2 emissions [5]. Nevertheless, the relationship that exists between these variables has been explained in different ways [18][20].

       Scholars have focused on different periods and countries, while using different energy usage proxy variables. This has given rise to some inconsistencies in the findings and results across these studies [35][42]. Hence, the different studies analysed suggest that there is a need to take policy-related actions to address these outcomes [11][17]. It is, therefore, not surprising that efforts are being made at the global scene to further prevent the effects of CO2 emissions by fostering a low carbon economy [1][43].

3. The Role of Climate Finance in the Transition to a Low Carbon Economy

       Organisations such as the United Nations (UN) and the Intergovernmental Panel on Climate Change (IPCC) have taken different actions and measures in addressing climate change issues [3]. Worth mentioning is the 13th Conference of Parties (COP) held in 2007 at Bali in which the stakeholders presented finance as a pivotal factor to address climate change issues [44]. Thus, the emergence of the concept of “climate finance”. Even though the concept lacks a generally accepted definition, it is perceived as the resources invested in climate change mitigation and adaptation measures [44][45]. The 2009 COP held in Copenhagen further affirmed the importance of climate finance in combating global climate change. This led to the generation of over $30 billion in aid between the period of 2010 to 2012 from developed countries to developing economies [14]. Also, an additional mobilization for $100 billion a year by 2020 was proposed by developed economies to developing economies. This is scheduled to extend until 2025. This is in line with the argument by Steckel et al. [46] that even though most of the CO2 emissions come from developed countries due to industrialization, it is essential to involve both the developing and emerging economies in the fight against the reduction of global emissions.

References

  1. Balint, T.; Lamperti, F.; Mandel, A.; Napoletano, M.; Roventini, A.; Sapio, A. Complexity and the economics of climate change: A survey and a look forward. Ecol. Econ. 2017, 138, 252–265, doi:10.1016/j.ecolecon.2017.03.032.
  2. Fouquet, R. Lessons from energy history for climate policy: Technological change, demand and economic development. Energy Res. Soc. Sci. 2016, 22, 79–93, doi:10.1016/j.erss.2016.09.001.
  3. Urry, J. Climate change and society. In Why the Social Sciences Matter; Palgrave Macmillan: London, UK, 2015; pp. 45–59.
  4. Zhang, C.; Zhou, K.; Yang, S.; Shao, Z. On electricity consumption and economic growth in China. Renew. Sustain. Energy Rev. 2017, 76, 353–368, doi:10.1016/j.rser.2017.03.071.
  5. Yildirim, H.H. Economic Growth and Energy Consumption for OECD Countries. In Regional Studies on Economic Growth, Financial Economics and Management; Springer: Cham, Switzerland, 2017; pp. 245–255, doi:10.1007/978-3-319-54112-9_15.
  6. Phimphanthavong, H. The impacts of economic growth on environmental conditions in laos. Int. J. Bus. Manag. Econ. Res. 2013, 4, 766–774.
  7. Kasman, A.; Duman, Y.S. CO2 emissions, economic growth, energy consumption, trade and urbanization in new EU member and candidate countries: A panel data analysis. Econ. Model. 2015, 44, 97–103, doi:10.1016/j.econmod.2014.10.022.
  8. Bushell, S.; Buisson, G.S.; Workman, M.; Colley, T. Strategic narratives in climate change: Towards a unifying narrative to address the action gap on climate change. Energy Res. Soc. Sci. 2017, 28, 39–49, doi:10.1016/j.erss.2017.04.001.
  9. Talbi, B. CO2 emissions reduction in road transport sector in Tunisia. Renew. Sustain. Energy Rev. 2017, 69, 232–238, doi:10.1016/j.rser.2016.11.208.
  10. Wang, A.; Lin, B. Assessing CO2 emissions in China’s commercial sector: Determinants and reduction strategies. J. Clean. Prod. 2017, 164, 1542–1552, doi:10.1016/j.jclepro.2017.07.058.
  11. Hossain, S. An econometric analysis for CO2 emissions, energy consumption, economic growth, foreign trade and urbanization of Japan. Low Carbon Econ. 2012, 3, doi:10.4236/lce.2012.323013.
  12. Paiva, S.L.; Savi, M.A.; Viola, F.M.; Leiroz, A.J. Global warming description using Daisyworld model with greenhouse gases. Biosystems 2014, 125, 1–15, doi:10.1016/j.biosystems.2014.09.008.
  13. Resnik, D.B. Climate change: Causes, consequences, policy, and ethics. In Bioethical Insights into Values and Policy; Springer: Cham, Switzerland, 2016; pp. 47–58.
  14. Meltzer, J.P. Financing low carbon, climate resilient infrastructure: The role of climate finance and green financial systems. Clim. Resilient Infrastruct. Role Clim. Financ. Green Financ. Syst. 2016, doi:10.2139/ssrn.2841918.
  15. Ozturk, I.; Acaravci, A. CO2 emissions, energy consumption and economic growth in Turkey. Renew. Sustain. Energy Rev. 2010, 14, 3220–3225, doi:10.1016/j.rser.2017.07.028.
  16. Wang, S.S.; Zhou, D.Q.; Zhou, P.; Wang, Q.W. CO2 emissions, energy consumption and economic growth in China: A panel data analysis. Energy Policy 2011, 39, 4870–4875, doi:10.1016/j.enpol.2011.06.032.
  17. Esso, L.J.; Keho, Y. Energy consumption, economic growth and carbon emissions: Cointegration and causality evidence from selected African countries. Energy 2016, 114, 492–497, doi:10.1016/j.energy.2016.08.010.
  18. Rahman, M.M. Do population density, economic growth, energy use and exports adversely affect environmental quality in Asian populous countries? Renew. Sustain. Energy Rev. 2017, 77, 506–514, doi:10.1016/j.rser.2017.04.041.
  19. Amri, F. Intercourse across economic growth, trade and renewable energy consumption in developing and developed countries. Renew. Sustain. Energy Rev. 2017, 69, 527–534, doi:10.1016/j.rser.2016.11.230.
  20. Saidi, K.; Hammami, S. The impact of CO2 emissions and economic growth on energy consumption in 58 countries. Energy Rep. 2015, 1, 62–70, doi:10.1016/j.egyr.2015.01.003.
  21. Dogan, E.; Seker, F. An investigation on the determinants of carbon emissions for OECD countries: Empirical evidence from panel models robust to heterogeneity and cross-sectional dependence. Environ. Sci. Pollut. Res. 2016, 23, 14646–14655, doi:10.1007/s11356-016-6632-2.
  22. Karmellos. M.; Kopidou, D.; Diakoulaki, D. A decomposition analysis of the driving factors of CO2 (Carbon dioxide) emissions from the power sector in the European Union countries. Energy 2016, 94, 680–692, doi:10.1016/j.energy.2015.10.145.
  23. Stolyarova, E. Carbon Dioxide Emissions, Economic Growth and Energy Mix: Empirical Evidence From 93 Countries. Climate Economics Chair Paris-Dauphine University, Paris, France, 2009.
  24. Sharma, S.S. Determinants of carbon dioxide emissions: Empirical evidence from 69 countries. Appl. Energy 2011, 88, 376–382, doi:10.1016/j.apenergy.2010.07.022.
  25. Cetin, M.; Ecevit, E. Urbanization, Energy Consumption and CO2 Emissions in Sub-Saharan Countries: A Panel Cointegration and Causality Analysis. J. Econ. Dev. Stud. 2015, 3, 66–76, doi:10.15640/jeds.v3n2a7.
  26. Keho, Y. What drives energy consumption in developing countries? The experience of selected African countries. Energy Policy 2016, 91, 233–246, doi:10.1016/j.enpol.2016.01.010.
  27. Zakarya, G.Y.; Mostefa, B.; Abbes, S.M.; Seghir, G.M. Factors Affecting CO2 Emissions in the BRICS countries: A panel data analysis. Procedia Econ. Financ. 2015, 26, 114–125, doi:10.1016/S2212-5671(15)00890-4.
  28. AB-Rahim, R.; Xin-Di, T. The determinants of CO2 emissions in ASEAN 3 countries. J. Entrep. Bus. 2016, 4, 26–37, doi:10.17687/JEB.0301.04.
  29. Jiang, X.; Guan, D. Determinants of global CO2 emissions growth. Appl. Energy 2016, 184, 1132–1141, doi:10.1016/j.apenergy.2016.06.142.
  30. Jiang, S.; Yang, C.; Guo, J.; Ding, Z.; Tian, L.; Zhang, J. Uncovering the Driving Factors of Carbon Emissions in an Investment Allocation Model of China’s High-Carbon and Low-Carbon Energy. Sustainability 2017, 9, 1021, doi:10.3390/su9061021.
  31. Abdallh, A.A.; Abugamos, H. A semi-parametric panel data analysis on the urbanisation-carbon emissions nexus for the MENA countries. Renew. Sustain. Energy Rev. 2017, 78, 1350–1356, doi:10.1016/j.rser.2017.05.006.
  32. Mirza, F.M.; Kanwal, A. Energy consumption, carbon emissions and economic growth in Pakistan: Dynamic causality analysis. Renew. Sustain. Energy Rev. 2017, 72, 1233–1240, doi:10.1016/j.rser.2016.10.081.
  33. Nain, M.Z.; Ahmad, W.; Kamaiah, B. Economic growth, energy consumption and CO2 emissions in India: A disaggregated causal analysis. Int. J. Sustain. Energy 2017, 36, 807–824, doi:10.1080/14786451.2015.1109512.
  34. Rehman, M.U.; Rashid, M. Energy consumption to environmental degradation, the growth appetite in SAARC nations. Renew. Energy 2017, 111, 284–294, doi:10.1016/j.renene.2017.03.100.
  35. Dogan, E.; Aslan, A. Exploring the relationship among CO2 emissions, real GDP, energy consumption and tourism in the EU and candidate countries: Evidence from panel models robust to heterogeneity and cross-sectional dependence. Renew. Sustain. Energy Rev. 2017, 77, 239–245, doi:10.1016/j.rser.2017.03.111.
  36. Dritsaki, C.; Dritsaki, M. Causal relationship between energy consumption, economic growth and CO2 emissions: A dynamic panel data approach. Int. J. Energy Econ. Policy 2014, 4, 125.
  37. Hwang, J.; Yoo, S. Energy consumption, CO2 emissions, and economic growth: Evidence from Indonesia. Qual. Quant. 2014, 48, 63–73, doi:10.1007/s11135-012-9749-5.
  38. Omri, A. CO2 emissions, energy consumption and economic growth nexus in MENA countries: Evidence from simultaneous equations models. Energy Econ. 2013, 40, 657–664, doi:10.1016/j.eneco.2013.09.003.
  39. Alam, M.J.; Begum, I.A.; Buysse, J.; Rahman, S.; Van Huylenbroeck, G. Dynamic modeling of causal relationship between energy consumption, CO2 emissions and economic growth in India. Renew. Sustain. Energy Rev. 2011, 15, 3243–3251, doi:10.1016/j.rser.2011.04.029.
  40. Hossain, M.S. Panel estimation for CO2 emissions, energy consumption, economic growth, trade openness and urbanization of newly industrialized countries. Energy Policy 2011, 39, 6991–6999, doi:10.1016/j.enpol.2011.07.042.
  41. Menyah, K.; Wolde-Rufael, Y. Energy consumption, pollutant emissions and economic growth in South Africa. Energy Econ. 2010, 32, 1374–1382, doi:10.1016/j.eneco.2010.08.002.
  42. Pablo-Romero, M.D.; De Jesús, J. Economic growth and energy consumption: The energy-environmental Kuznets curve for Latin America and the Caribbean. Renew. Sustain. Energy Rev. 2016, 60, 1343–1350, doi:10.1016/j.rser.2016.03.029.
  43. Granoff, I.; Hogarth, J.R.; Miller, A. Nested barriers to low-carbon infrastructure investment, Nat. Clim. Chang. 2016, 6, 1065–1071, doi:10.1038/nclimate3142.
  44. World Bank. Climate Finance: Innovative Approaches in Supporting the Climate Action. Open Learn. Course 2017. Available online: http://www.worldbank.org (accessed on 24 March 2020)
  45. Ellis, E.C.; Kaplan, J.O.; Fuller, D.Q.; Vavrus, S.; Goldewijk, K.K.; Verburg, P.H. Used planet: A global history. Proc. Natl. Acad. Sci. USA 2013, 110, 7978–7985, doi:10.1073/pnas.1217241110.
  46. Steckel, J.C.; Jakob, M.; Flachsland, C.; Kornek, U.; Lessmann, K.; Edenhofer, O. From climate finance toward sustainable development finance. Wiley Interdiscip. Rev. Clim. Chang. 2017, 8, doi:10.1002/wcc.437.
More
© Text is available under the terms and conditions of the Creative Commons Attribution (CC BY) license; additional terms may apply. By using this site, you agree to the Terms and Conditions and Privacy Policy.
Upload a video for this entry
Information
Subjects: Environmental Sciences
Contributors MDPI registered users' name will be linked to their SciProfiles pages. To register with us, please refer to https://encyclopedia.pub/register :
Oluyomi A. Osobajo
,
Afolabi Otitoju
,
Martha Ajibola Otitoju
,
Adekunle Oke
View Times: 625
Revisions: 2 times (View History)
Update Date: 26 Oct 2020
Table of Contents
    1000/1000
    Hot Most Recent
    Feedback