The Impact of Energy Consumption and Economic Growth on Carbon Dioxide Emissions

Oluyomi A. Osobajo, Afolabi Otitoju, Martha Ajibola Otitoju and Adekunle Oke
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Oluyomi A. Osobajo: Aberdeen Business School, The Robert Gordon University, Garthdee Road, Aberdeen AB10 7QE, UK
Afolabi Otitoju: Renewable Energy Consultant, Trinomial Solutions Ltd., Aberdeen AB12 3DZ, UK
Martha Ajibola Otitoju: Repsol Sinopec Resources UK Limited, Holburn Road, Aberdeen AB10 6BZ, UK
Adekunle Oke: Aberdeen Business School, The Robert Gordon University, Garthdee Road, Aberdeen AB10 7QE, UK

Sustainability, 2020, vol. 12, issue 19, 1-16

Abstract: This study explored the effect of energy consumption and economic growth on CO 2 emissions. The relationship between energy consumption, economic growth and CO 2 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 CO 2 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 CO 2 emissions. However, the pooled OLS and fixed methods both showed that energy consumption and economic growth have a significant positive impact on CO 2 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 CO 2 emissions.

Keywords: climate change; climate finance; economic growth; CO 2 emissions; energy consumption (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (31)

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