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Investigating the relationship between economic growth, energy consumption, and carbon dioxide (CO2) emissions: a comparative analysis of South Asian nations and G-7 countries

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Abstract

This study provides a novel perspective for examining the relationship between economic growth, energy consumption, and carbon dioxide (CO2) emissions by comparing developing countries, particularly those in the South Asian region, with developed regions represented by the G-7 countries. The analysis is based on datasets spanning from 1996 to 2021. We use various analytical methodologies, including panel regression models, simultaneous regression models, and panel autoregressive distributed lag (ARDL) models to provide a comprehensive understanding of these complex relationships. The findings indicate that energy consumption strongly drives economic growth in both G-7 and South Asian countries. Furthermore, CO2 emissions are found to have a positive impact on economic growth in both regions. It is also observed that higher per capita gross domestic product (GDP) encourages greater energy consumption in both regions. Additionally, CO2 emissions positively influence energy consumption in both groups. The findings also highlight that financial development and population growth positively affect energy consumption in South Asian countries. As for CO2 emissions, the results indicate that per capita GDP positively contributes to increased pollution in both regions, coupled with the fact that higher energy consumption aligns with higher CO2 emissions. In G-7 countries, renewable electricity is linked with reduced CO2 emissions. In light of these findings, policymakers are advised to prioritize sustainable economic growth by promoting energy-efficient technologies and renewable energy sources. Furthermore, promoting the use of renewable energy sources can contribute to reducing CO2 emissions and supporting environmental preservation.

Graphical Abstract

Relationship Between Economic Growth, Energy Consumption, and Carbon Dioxide (CO2) Emissions

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Data availability

The data are openly available on the website of the World Development Indicators (WDI).

Abbreviations

3SLS:

Three-stage least squares

AF:

Airborne fraction

ARDL:

Autoregressive distributed lag model

ASEAN:

Association of South East Asian Nations

BRICS:

Brazil, Russia, China, India, and the South Africa

CH4:

Methane

CO2 :

Carbon dioxide

COP:

Conference of the Parties

DOLS:

Dynamic ordinary least squares

E-7:

China, Russia, India, Brazil, Turkey, Mexico, and Indonesia

EECI:

Electric energy consumption intensity

EKC:

Environmental Kuznets curve

ETC:

Error correction term

FDI:

Foreign direct investment

FMOLS:

Fully modified ordinary least squares

G-7:

France, US, UK, Germany, Japan, Italy, and Canada

GDP:

Gross domestic product

GDPPC:

Gross domestic product per capita

GHG:

Greenhouse gas

IPCC:

Intergovernmental Panel on Climate Change

IPS:

Im, Pesaran, and Shin

LCCP:

Low-carbon city pilots

LLC:

Levin, Lin, and Chu

MINT:

Mexico, Indonesia, Nigeria, and Turkey

N2O:

Nitrous oxide

OECD:

Organization for Economic Cooperation and Development

PMG:

Pooled mean group

UNFCCC:

United Nations Framework Convention on Climate Change

VAR:

Vector autoregressive models

VECM:

Vector error correction model

WDI:

World Development Indicators

WMO:

World Meteorological Organization

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The authors declare that no funds, grants, or other support were received during the preparation of this manuscript.

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Authors and Affiliations

  1. Department of Economics, Mahatma Gandhi Central University, Motihari, Bihar, India

    Kailash Chandra Pradhan & Bidhubhusan Mishra

  2. Department of Economics, Ramadevi Women’s University, Bhubaneswar, Odisha, India

    Sonali Madhusmita Mohapatra

Authors
  1. Kailash Chandra Pradhan
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  2. Bidhubhusan Mishra
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  3. Sonali Madhusmita Mohapatra
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Contributions

Conceptualization, methodology, formal analysis, and writing—original draft preparation were performed by KCP. Conceptualization, material preparation, and review of the literature were written by Mr. BM. The data collection and analysis were performed by SMM, and all authors commented on previous versions of the manuscript. All authors read and approved the final manuscript.

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Correspondence to Kailash Chandra Pradhan.

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Pradhan, K.C., Mishra, B. & Mohapatra, S.M. Investigating the relationship between economic growth, energy consumption, and carbon dioxide (CO2) emissions: a comparative analysis of South Asian nations and G-7 countries. Clean Techn Environ Policy (2024). https://doi.org/10.1007/s10098-024-02802-5

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