The Dynamic Relationship between Energy Consumption, Economic Growth and CO₂ Emissions: Evidence from India

The present study investigates the relationship between energy consumption, CO2 emissions and economic growth in India uses quarterly data from 1971Q4 to 2011Q4. Using Johanson cointegration technique, Fully Modified Ordinary Least Square (FMOLS) and Dynamic Ordinary Least Square (DOLS) methods this paper find the existence of long-run relationship between variables and find positive relationship between energy consumption, CO2 emissions and per capita GDP when energy consumption as dependent variable. In addition, the VECM Granger causality test indicates that unidirectional causality running from per capita GDP and CO2 emissions to energy consumption in the long-run. When Per capita GDP as dependent variable, there is evidence of short-run causality running from energy consumption and CO2 emissions to per capita GDP. These results suggest that emerging economy like India should undertake intensities to reduce CO2 emissions intensity by giving importance of renewable energy and clean energy consumption.