Empirical Relationship between Economic Growth, Energy Consumption and CO2 Emissions: Evidence from ASEAN Countries

Abstract

This study tested the EKC (environment Kuznets curve) framework for selected 9 ASEAN countries of the time period of 1970-2019. The EKC framework hypothesis checked under 2 linkages, first one is to examine the relationship between energy consumption, GDP and CO2 and the other one is energy consumption, GDP square and CO2. The study examines both long and short run effect of energy consumption, GDP, square of GDP on carbon emission. Firstly, used Levin Lin Chu and Lm Pasaran panel unit root test to check the order of integration of indicators further for short and long run estimates are examined by panel Auto Regressive Distributive lag (ARDL / PMG). Results of LLC, Lm Pesaran, reveals that the variables have mixed integration order. Due to the mixed order of integration, PMG results showed a rise in energy consumption by 1%, caused a rise in emissions by 0.8377%. Carbon emission (CO2) decreased by 0.1622%, by increase the square of economic growth while increasing economic growth by 1%, leading to boosts carbon emissions by 2.05%. The negative and positive effect of GDP and square of economic growth approve the EKC theory. Furthermore, this study suggests that to maintain sustainable economic expansion goals policy makers ensure the use of sustainable energy sources (renewable energy) to maximize growth of country and minimize carbon emission. It results carbon sequestration, protect green environment and safe lives.