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Exploring the impact of economic growth, trade openness and urbanization with evidence from a large developing economy of India towards a sustainable and practical energy policy

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Abstract

Causal relationship among economic growth, urbanization, energy consumption, renewable energy share, trade openness and carbon emissions in the context of a large developing economy of India over the period 1990–2015 is examined in this study. The results support the existence of co-integration among the major variables. Ridge regression is done to model the impact of these variables on carbon emission. Estimated coefficients of economic growth and energy consumption are positive and significant. The major contribution to carbon emission in India comes from total energy consumption (34.12%) and economic growth (12.49%), while renewable energy consumption shows negative impact (− 29.76%). Results support feedback hypothesis among trade and carbon emission. This is revealed that the increase in GDP and trade openness facilitates adoption of renewable and energy-efficient technologies to reduce emission. In view of continued heavy dependence on indigenous fossil fuel coal as the major energy provider, concern should be adoption of ultra-low-emission technology in coal-fired power plants for immediate relief. Development of renewable energy sources coupled with switching to electric mass transport systems and large-scale adoption of energy-efficient green technologies appear as the other most practical and sustainable policy suggestions for a vast economy like India.

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Abbreviations

EIA:

Energy Information Administration

UNPD:

United Nations Population Division

WDI:

World Development Indicator

VECM:

Vector error correction model

ARDL:

Autoregressive distributed lag

ASEAN:

Association of Southeast Asian Nations

IEA:

International Energy Agency

GDP:

Per capita growth (Gross Domestic Product)

EC:

Energy use per capita

REC:

Share of renewable energy use in total final energy consumption

TO:

Trade openness

URB:

Urbanization

ADF test:

Augmented Dickey–Fuller test

PP test:

Phillips–Perron test

AR:

Autoregression

VAR:

Vector autoregression

LR:

Likelihood ratio test

FMOLS:

Fully modified ordinary least square regression

DOLS:

Dynamic ordinary least square regression

EKC:

Environmental Kuznets’s curve

STIRPAT:

Stochastic impacts by regression of population, affluence and technology

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Acknowledgements

The authors are thankful to the Department of Science and Technology, Ministry of Science and Technology, Government of India, for providing the financial support through DST-INSPIRE Fellowship Programme for doctoral research (DST/INSPIRE Fellowship/2018/293).

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Authors and Affiliations

  1. Environment and Membrane Technology Laboratory, Department of Chemical Engineering, National Institute of Technology Durgapur, Durgapur, 7132009, India

    Sanghita Basu & Parimal Pal

  2. Department of Management Studies, National Institute of Technology Durgapur, Durgapur, 713209, India

    Mousumi Roy & Parimal Pal

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  1. Sanghita Basu
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  2. Mousumi Roy
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Correspondence to Mousumi Roy.

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Basu, S., Roy, M. & Pal, P. Exploring the impact of economic growth, trade openness and urbanization with evidence from a large developing economy of India towards a sustainable and practical energy policy. Clean Techn Environ Policy 22, 877–891 (2020). https://doi.org/10.1007/s10098-020-01828-9

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