CO2 Emissions, Economic Growth, and Energy Consumption in G7 and BRICS Countries

Bhattarai, Keshab; Brind, Betsy

Abstract

This research set out to investigate whether economic growth has an impact on CO 2 emissions in G7 and BRICS countries, and whether the Paris Agreement has been effective in respect to CO 2 emissions by successfully analysing each of the five null hypotheses. This was achieved through analysing the 12 countries between 1990 to 2019. A panel AMG method was applied as the main econometric estimator, being able to account for both CD and heterogeneity, it seemed to be the most efficient panel estimation method. The findings differing when analysing the all countries in the panel together, to when examining individual relationships. Alongside this, cointegration and causality tests were applied to help understand the relationship between CO 2 , GDP, and energy consumption. The robustness of the panel data analysis is checked by employing both per capita and real figures for all 12 countries. A key finding from this study is that the EKC hypothesis does not stand true for all individual countries. Although, a long-run equilibrium relationship between CO 2 emission, GDP, and energy consumption for the entire panel is found for real level figures, individually the results vary. Saying this, the findings suggest a long-run equilibrium relationship between CO 2 emissions, GDP, and energy consumption and strong causality between variables. Alongside this, the decline in G7 countries real level CO 2 since the signing of the Paris Agreement and the results of the optimal GDP level both support the differences between BRICS and G7 countries. These findings support the Green Solow Model (Brock and Taylor, 2010), suggesting that once a countries growth rate stabilises, technological progress can lead to a decline in CO 2 emissions, tending towards net zero emissions. Acknowledging that continued economic growth brings greater harm to the environment is critical for the design of appropriate developing strategies for emerging economies and understanding whether the ambitious aims of achieving net zero emission by 2050 can be achieved at the current pace of change, this reinforces the Paris agreement's suggestion of developed countries taking the lead on reducing emissions seem to be a far and realistic predication based on this studies results.

Citation

Bhattarai, K., & Brind, B. (2021). CO2 Emissions, Economic Growth, and Energy Consumption in G7 and BRICS Countries. Journal of Development Economics and Finance, 2(2),

• Journal Article Type: Article
• Acceptance Date: Dec 27, 2021
• Online Publication Date: Dec 27, 2022
• Publication Date: 2021
• Deposit Date: Jan 17, 2022
• Publicly Available Date: Jan 31, 2022
• Journal: JOURNAL OF DEVELOPMENT ECONOMICS AND FINANCE
• Publisher: ARF India
• Peer Reviewed: Peer Reviewed
• Volume: 2
• Issue: 2
• Keywords: CO2 emissions; economic growth; and energy consumption JEL: E2; C1; Q4; Q5
• Public URL: https://hull-repository.worktribe.com/output/3913400
• Publisher URL: https://arfjournals.com/image/catalog/Journals%20Papers/JDEF/No.%202%20(2021)/2_Keshab%20Bhattarai.pdf