The Nonlinear Dynamics of CO 2 Emissions in Pakistan: A Comprehensive Analysis of Transportation, Electricity Consumption, and Foreign Direct Investment

Muhammad Adeel, Biao Wang (), Ji Ke and Israel Muaka Mvitu
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Muhammad Adeel: School of Electronics and Control Engineering, Chang’an University, Xi’an 710064, China
Biao Wang: School of Energy and Electrical Engineering, Chang’an University, Xi’an 710064, China
Ji Ke: School of Energy and Electrical Engineering, Chang’an University, Xi’an 710064, China
Israel Muaka Mvitu: School of Electronics and Control Engineering, Chang’an University, Xi’an 710064, China

Sustainability, 2024, vol. 17, issue 1, 1-26

Abstract: CO 2 emissions are major drivers of climate change, causing global warming, extreme weather, and biodiversity loss. They disrupt ecosystems, deplete resources, and threaten public health and economic stability. Reducing CO 2 emissions is essential for climate stability and sustainability. This study explores the complex relationships between CO 2 emissions and factors such as the transportation sector, electricity consumption, foreign direct investment (FDI), international trade, and gross domestic product (GDP). The focus is on small- and medium-sized enterprises (SME) in Pakistan. Using time series data from 2000 to 2022. This study applies advanced econometric techniques, including nonlinear autoregressive distributed lag (NARDL), dynamic ordinary least squares (DOLS), and fully modified ordinary least squares (FMOLS). The findings highlight that increased electricity consumption, international trade, transportation activities, and FDI contribute to higher CO 2 emissions. However, FDI can also help reduce emissions, particularly through investments in green technologies. This study emphasizes the importance of transitioning to renewable energy and adopting sustainable practices across sectors such as electricity, trade, and transportation. Specifically, transportation and electricity consumption were found to significantly impact CO 2 emissions, with a 10% increase in transportation activities resulting in a 5% rise in emissions. Conversely, FDI can reduce emissions by approximately 3% per unit of investment, largely due to green technology adoption. Additionally, integrating renewable energy and energy-efficient technologies in transportation can lead to a 20% reduction in emissions. Policymakers and experts must prioritize strategies that promote renewable energy adoption and integrate sustainable practices to reduce CO 2 emissions and ensure long-term environmental sustainability. This research is innovative in its analysis of the interconnected effects of electricity consumption, trade, transportation, and FDI on CO 2 emissions. By applying sophisticated econometric methods, it highlights the potential of FDI, particularly green investments, to mitigate environmental damage. This study, focusing on Pakistan, offers insights into how economic growth can be balanced with environmental sustainability.

Keywords: transportation industry; electricity energy; foreign direct investment; environmental changes; CO 2 emission (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
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