Can Energy Efficiency Help in Achieving Carbon-Neutrality Pledges? A Developing Country Perspective Using Dynamic ARDL Simulations

Md. Emran Hossain, Soumen Rej, Sourav Mohan Saha, Joshua Chukwuma Onwe, Nnamdi Nwulu, Festus Bekun and Amjad Taha
Additional contact information
Soumen Rej: Vinod Gupta School of Management, Indian Institute of Technology Kharagpur, Kharagpur 721302, West Bengal, India
Sourav Mohan Saha: Department of Agricultural Finance, Co-Operatives and Banking, Khulna Agricultural University, Khulna 9100, Bangladesh
Joshua Chukwuma Onwe: Department of Economics and Development Studies, Alex Ekwueme Federal University Ndufu-Alike, Abakaliki P.M.B. 1010, Ebonyi State, Nigeria
Nnamdi Nwulu: Department of Electrical and Electronic Engineering Science, University of Johannesburg, Johannesburg 2006, South Africa
Amjad Taha: Banking and Finance Department, Eastern Mediterranean University, North Cyprus, Via Mersin 10, Famagusta 99628, Turkey

Sustainability, 2022, vol. 14, issue 13, 1-18

Abstract: The current research sheds light on the nexus between environmental degradation as proxied by carbon dioxide emissions (CO 2 ), energy efficiency (EE), economic growth, manufacturing value-added (MVA), and the interaction effect of EE and MVA in India. Using yearly data from 1980 to 2019, the current study employs dynamic auto-regressive distribution lag (DARDL) simulations and Fourier Toda and Yamamoto causality techniques. The findings of DARDL reveal that as income and MVA rise, environmental quality decreases, while EE improves environmental conditions in both the long and short run. Surprisingly, the interaction term of EE and MVA has a detrimental influence on environmental quality, meaning that India remains unable to provide energy savings technologies to the manufacturing industry. Furthermore, the environmental Kuznets curve (EKC) hypothesis is well-founded for India, as the long-run income coefficient is smaller than the short-run coefficient, implying that India is in its scale stage of economy, where economic growth is prioritized over environmental quality. The results of the causality technique reveal that CO 2 emissions and EE have a bidirectional association. Therefore, policymakers in India should embrace realistic industrialization strategies combined with moderate decarbonization and energy efficiency initiatives under the umbrella of sustainable industrial and economic growth.

Keywords: energy efficiency; dynamic ARDL; industrialization; INDCs; Make in India; carbon neutrality (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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