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Testing the environmental Kuznets curve in Brazil: The effect of renewable energy sources on CO2 emissions

May, Emily Pauline LU (2021) EKHS34 20211
Department of Economic History
Abstract
Clean sources of energy have increasingly gained importance as a means to mitigate climate change. This study analysed the relationship between CO2 emissions, GDP, GDP2, fossil fuel consumption, hydroelectricity consumption, new renewables (solar, wind, biomass) consumption, and biofuels consumption (all variables are per capita) in the context of the environmental Kuznets curve theory in Brazil for the period between 1970 and 2019. The Autoregressive Distributed Lag (ARDL) methodology was used to test a cointegration relationship and to estimate the long- and short-run estimates, and the Granger causality approach based on a vector error correction model (VECM) was employed to find the direction of the causal relationship. The empirical... (More)
Clean sources of energy have increasingly gained importance as a means to mitigate climate change. This study analysed the relationship between CO2 emissions, GDP, GDP2, fossil fuel consumption, hydroelectricity consumption, new renewables (solar, wind, biomass) consumption, and biofuels consumption (all variables are per capita) in the context of the environmental Kuznets curve theory in Brazil for the period between 1970 and 2019. The Autoregressive Distributed Lag (ARDL) methodology was used to test a cointegration relationship and to estimate the long- and short-run estimates, and the Granger causality approach based on a vector error correction model (VECM) was employed to find the direction of the causal relationship. The empirical results do not support the existence of an inverted U-shaped EKC relationship neither in the long run nor in the short run. Rather, they indicate that the relationship is formed like a U-shaped curve. In the long run, fossil fuels and biofuels consumption were found to increase CO2 emissions. Hydroelectricity and renewable energy consumption were found to decrease them, though the effect of renewable energy is small. The same effect could be observed in the short run, with the exception of hydroelectricity which was found to increase CO2 emissions. Hydroelectricity was also shown to Granger-cause CO2 emissions. The results imply that while cleaner than fossil fuels, future biofuel policies should be formulated with caution and that the overall trend of increasing CO2 emissions underlines the importance and urgency of developing clean and promising energy sources like wind and solar, and to reverse the current trend of an increasing use of fossil fuels for electricity. (Less)
Please use this url to cite or link to this publication:
author
May, Emily Pauline LU
supervisor
organization
course
EKHS34 20211
year
type
H1 - Master's Degree (One Year)
subject
language
English
id
9066474
date added to LUP
2022-06-28 10:11:10
date last changed
2022-06-28 10:11:10
@misc{9066474,
  abstract     = {{Clean sources of energy have increasingly gained importance as a means to mitigate climate change. This study analysed the relationship between CO2 emissions, GDP, GDP2, fossil fuel consumption, hydroelectricity consumption, new renewables (solar, wind, biomass) consumption, and biofuels consumption (all variables are per capita) in the context of the environmental Kuznets curve theory in Brazil for the period between 1970 and 2019. The Autoregressive Distributed Lag (ARDL) methodology was used to test a cointegration relationship and to estimate the long- and short-run estimates, and the Granger causality approach based on a vector error correction model (VECM) was employed to find the direction of the causal relationship. The empirical results do not support the existence of an inverted U-shaped EKC relationship neither in the long run nor in the short run. Rather, they indicate that the relationship is formed like a U-shaped curve. In the long run, fossil fuels and biofuels consumption were found to increase CO2 emissions. Hydroelectricity and renewable energy consumption were found to decrease them, though the effect of renewable energy is small. The same effect could be observed in the short run, with the exception of hydroelectricity which was found to increase CO2 emissions. Hydroelectricity was also shown to Granger-cause CO2 emissions. The results imply that while cleaner than fossil fuels, future biofuel policies should be formulated with caution and that the overall trend of increasing CO2 emissions underlines the importance and urgency of developing clean and promising energy sources like wind and solar, and to reverse the current trend of an increasing use of fossil fuels for electricity.}},
  author       = {{May, Emily Pauline}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Testing the environmental Kuznets curve in Brazil: The effect of renewable energy sources on CO2 emissions}},
  year         = {{2021}},
}