The Nexus Between CO2 Emission, Energy Consumption, and Economic Growth in Nigeria
DOI:
https://doi.org/10.51325/ejbti.v3i3.155Keywords:
ARDL, CO2, Emission, Pollution, Energy, Economic Growth.Abstract
Energy consumption promotes economic growth while simultaneously contributing significantly to carbon emissions, posing a quandary for policymakers in balancing economic growth and pollution reduction. This study empirically explores the relationship between carbon emissions and economic growth in Nigeria using cointegration and dynamic causality analysis with annual time-series data from 1981 to 2021. Several econometric techniques, including unit root tests, Granger causality tests, and cointegration tests using the Autoregressive Distributed Lag (ARDL) Bounds Test and ARDL model approach, are employed. To examine the causal links between the variables, Granger’s long-run dynamic analyses are conducted within an Error Correction Model (ECM) framework. The findings reveal a link between CO₂ emissions and economic growth in Nigeria. Throughout the study period, a negative and statistically insignificant relationship exists between CO₂ emissions and long-term economic growth. However, during the lagged period, CO₂ emissions and economic growth exhibit a strong and positive long-term association. Additionally, the study identifies a bidirectional long-run causal relationship between CO₂ emissions and economic growth. A key policy recommendation is for the government to implement clean energy strategies aimed at transitioning from non-renewable to renewable energy sources. This shift would help mitigate the negative effects of CO₂ emissions on economic development while promoting long-term sustainability.
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