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Energy Consumption as a Leading Factor of CO2 Emissions. Is the EKC still valid for the United States?

Zohaib, Muhammad LU and Trutwin, Ester (2021) NEKP01 20211
Department of Economics
Abstract
The objective of this paper is to examine the long-run relationship between CO2 emissions,
economic output (GDP), and energy consumption in the US during the period 1960-2015.
Energy consumption is investigated in its aggregated and disaggregated form i.e. Fossil
Fuel, Nuclear, and Renewable energy to elicit a more precise diagnosis of the emission-energy-GDP nexus. The paper contributes to existing literature by identifying the key
drivers of CO2 emissions for the US. To provide evidence that the included variables share
a common trend the Johansen cointegration method and a Vector Error Correction Model
(VECM) was applied. The long-run estimates obtained from the VECM indicate that an
increase in energy consumption contributes... (More)
The objective of this paper is to examine the long-run relationship between CO2 emissions,
economic output (GDP), and energy consumption in the US during the period 1960-2015.
Energy consumption is investigated in its aggregated and disaggregated form i.e. Fossil
Fuel, Nuclear, and Renewable energy to elicit a more precise diagnosis of the emission-energy-GDP nexus. The paper contributes to existing literature by identifying the key
drivers of CO2 emissions for the US. To provide evidence that the included variables share
a common trend the Johansen cointegration method and a Vector Error Correction Model
(VECM) was applied. The long-run estimates obtained from the VECM indicate that an
increase in energy consumption contributes positively towards CO2 emissions, whereas an
increase in GDP mitigates environmental degradation. Fossil fuel energy consumption is
found to be the main culprit for proliferating CO2 emissions. The results for both these
cases reveal that the modified Environmental Kuznets Curve (EKC) hypothesis does not
hold for the US. However, considering nuclear and renewable energy use, the empirical
findings suggest that EKC is valid and the consumption of clean energy sources mitigates
environmental degradation significantly. Additionally, we declare that the EKC is rather
a long-run phenomena than short-run, as we do not find significant short-run Granger
causality running from energy consumption and GDP to CO2 emissions. Thus, the US
government should frame policies that promote renewable energy use either by taxing fossil
fuel or subsidizing alternative and renewable energy. The government is further advised
to increase investment in clean technologies and enhance public awareness on energy consumption to curb the degrading environment. (Less)
Please use this url to cite or link to this publication:
author
Zohaib, Muhammad LU and Trutwin, Ester
supervisor
organization
course
NEKP01 20211
year
type
H2 - Master's Degree (Two Years)
subject
keywords
EKC, CO2 emissions, GDP, aggregated and disaggregated energy consumption, Cointegration, VECM, Granger causality, US
language
English
id
9049649
date added to LUP
2021-07-05 13:23:25
date last changed
2021-07-05 13:23:25
@misc{9049649,
  abstract     = {{The objective of this paper is to examine the long-run relationship between CO2 emissions,
economic output (GDP), and energy consumption in the US during the period 1960-2015.
Energy consumption is investigated in its aggregated and disaggregated form i.e. Fossil
Fuel, Nuclear, and Renewable energy to elicit a more precise diagnosis of the emission-energy-GDP nexus. The paper contributes to existing literature by identifying the key
drivers of CO2 emissions for the US. To provide evidence that the included variables share
a common trend the Johansen cointegration method and a Vector Error Correction Model
(VECM) was applied. The long-run estimates obtained from the VECM indicate that an
increase in energy consumption contributes positively towards CO2 emissions, whereas an
increase in GDP mitigates environmental degradation. Fossil fuel energy consumption is
found to be the main culprit for proliferating CO2 emissions. The results for both these
cases reveal that the modified Environmental Kuznets Curve (EKC) hypothesis does not
hold for the US. However, considering nuclear and renewable energy use, the empirical
findings suggest that EKC is valid and the consumption of clean energy sources mitigates
environmental degradation significantly. Additionally, we declare that the EKC is rather
a long-run phenomena than short-run, as we do not find significant short-run Granger
causality running from energy consumption and GDP to CO2 emissions. Thus, the US
government should frame policies that promote renewable energy use either by taxing fossil
fuel or subsidizing alternative and renewable energy. The government is further advised
to increase investment in clean technologies and enhance public awareness on energy consumption to curb the degrading environment.}},
  author       = {{Zohaib, Muhammad and Trutwin, Ester}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Energy Consumption as a Leading Factor of CO2 Emissions. Is the EKC still valid for the United States?}},
  year         = {{2021}},
}