Comparing the Role of Coal to Other Energy Resources in the Environmental Kuznets Curve of Three Large Economies

Abstract

This article aims to examine the dynamic relationship between coal, gas and oil consumption, economic growth and carbon dioxide (CO₂) emissions in the three largest economies namely China, the United States and India, over the period of 1965–2017. In a novel attempt, we employ recent econometric techniques based on the inclusion of structural break(s) in unit root. We apply OLS, FMOLS, DOLS, and CCR econometric regression to validate the EKC hypothesis for three selected countries. We find that the United States and India exhibit a U-inverted EKC between CO₂ emissions and economic growth. On the other side, China exhibits U-shaped EKC when we include as energy proxy coal and oil consumption. When we explore the connection between carbon emissions and economic growth considering gas consumption, we find a U-inverted EKC. These dissimilar behaviors confirm that the energy pattern of these countries exert a decisive impact over sustainable economic growth, enhancing previous literature that connects fossil sources, economic growth, and environmental degradation process. Our estimation results open up new insights for policy makers to control the level of coal consumption, to sustain economic growth and to mitigate CO₂ emissions.

Keywords:

• CO₂ emissions
• economic growth
• coal
• oil
• gas consumption
• structural breaks tests
• cointegration
• causality tests

Notes

Notes

1 f’(GDP) is a metric of the marginal income sensitivity to the environmental quality demanded.

2 1 short ton = 0.91 metric tons (Source: http://downloadcenter.connectlive.com/events/npc071807/pdf-downloads/NPC-Hard_Truths-Acronyms-Conversion.pdf).

3 Chandran and Tang (2013) found similar consequences for China and India.