Economic growth and carbon emissions in South Africa: An empirical investigation

Abstract

In this paper we examine the causal relationship between CO2 emissions and economic growth in South Africa - using the newly developed ARDL-Bounds testing approach. We incorporate energy consumption in a bivariate causality setting between CO2 emissions and economic growth, thereby creating a simple trivariate model. Our empirical results show that there is a distinct unidirectional causal flow from economic growth to carbon emissions in South Africa. We also find that energy consumption Granger-causes both carbon emissions and economic growth. We recommend that energy conservation policies, as well as appropriate forms of renewable energy, should be explored in South Africa in order to enable the country to reduce its carbon emission footprint without necessarily sacrificing its output growth. The results apply irrespective of whether the causality is estimated in the short or in the long run. © 2012 The Clute Institute.