The environment–growth dilemma: new evidence using a panel cointegration approach

ABSTRACT

This paper contributes to the literature by extending the long-run and the causal relationship between greenhouse gas emissions, energy consumption and economic growth to a panel of 13 Portuguese economic sectors over the period 1975–2013. Hence, we test for the case of Portugal whether a relationship between economic activity and emissions exists, and what configuration that relation assumes, accounting for the structure of the economic activity, an aspect that has been neglected in previous literature. The sectoral approach followed in the study allows to account for the likely heterogeneity at sectoral level, to account for the structure of the economic activity and its changes over time, leading to an environment-economic analysis complementary to other findings. In this respect, the research on the relationship between emissions, energy consumption and economic growth carried out in this paper may be of relevance for policy-makers to better understand the energy–environment–growth dynamics. Such knowledge may support the design and implementation of more effective policies, which contribute to reduce emissions of greenhouse gases while preserving economic growth.

KEYWORDS:

• EKC
• Portugal

Acknowledgments

We are grateful to the useful comments provided by the anonymous reviewers and the editor which helped us improve this work. Any remaining shortcomings are our sole responsibility.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. For a detailed analysis of how these tests are conducted and their specifications we suggest the reading of these articles.

2. We excluded the sectors Transports and Residential, as well as Fishing as the levels of CO₂ emissions for this sector are negligible. The emissions of the energy sector were allocated to the productive sectors applying an annual average coefficient estimated by IEA.

Additional information

Funding

This work was financially supported by the research unit on Governance, Competitiveness and Public Policy (project POCI-01-0145-FEDER-006939), funded by FEDER funds through COMPETE2020 – Programa Operacional Competitividade e Internacionalização (POCI) - and by national funds through FCT – Fundação para a Ciência e a Tecnologia. Celeste Varum acknowledges the FCT support [grant number SFRH/BSAB/127794/2016].