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On the nexus among carbon dioxide emissions, energy consumption and economic growth in G-7 countries: new insights from the historical decomposition approach

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Abstract

This paper investigates the relationship between carbon dioxide emissions, energy consumption and economic growth in the G-7 countries from a historical perspective. To this end, taking time-varying interaction and business cycle into account, we use the historical decomposition method for the first time in the literature. Our results provide evidence that Canada, Italy, Japan and partly the USA need to sacrifice economic growth if they aim to reduce CO2 emissions by decreasing fossil-based energy use. This situation is not valid since the early 1990s for France, throughout the analysis period for Germany and a few exceptions in all periods for the UK. Furthermore, empirical results provide evidence contrary to the EKC hypothesis for Canada, Germany, Japan, the UK and the USA. We found BC-shaped and N-shaped curves for France and Italy, respectively. Although the EKC hypothesis is not valid for Germany and the UK, economic growth has no damaging effect on environmental quality. Also, this effect seems to be cyclical for the USA.

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Notes

  1. Although there seems to be a difference between our calculation and World Bank data regarding CO2 emissions per capita, both data moved together exactly after 1991, which is the beginning year of the World Bank data. It is clear that this small detail is of no significance considering the 30-year data gain for Germany.

  2. These explanations are valid for the same figures shown below for the other countries.

  3. The shape of the relationship with respect to the per capita output is indirectly inferred from the observation that the per capita output was increasing through the study period.

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Authors and Affiliations

  1. Eastern Mediterranean University, Via Mersin 10, Famagusta, Northern Cyprus, Turkey

    Mehmet Balcilar

  2. Economic Research Forum, Cairo, Egypt

    Zeynel Abidin Ozdemir

  3. Izmir Democracy University, Izmir, Turkey

    Bedriye Tunçsiper

  4. Gazi University, Ankara, Turkey

    Huseyin Ozdemir

  5. Montpellier Business School, Montpellier, France

    Muhammad Shahbaz

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  1. Mehmet Balcilar
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Correspondence to Zeynel Abidin Ozdemir.

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Balcilar, M., Ozdemir, Z.A., Tunçsiper, B. et al. On the nexus among carbon dioxide emissions, energy consumption and economic growth in G-7 countries: new insights from the historical decomposition approach. Environ Dev Sustain 22, 8097–8134 (2020). https://doi.org/10.1007/s10668-019-00563-6

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