Academic journal article Political Economy Journal of India

A Study of Carbon Emissions, Energy Consumption and Economic Growth: The BRICS Experiences

Academic journal article Political Economy Journal of India

A Study of Carbon Emissions, Energy Consumption and Economic Growth: The BRICS Experiences

Article excerpt


Carbon based energy is one of the major natural resources that have driven economic growth. It was coal that made the industrial revolution possible, and the ever increasing use of carbon based fuels since that time has rapidly improved the quality of life of humankind. However, we have recently realized that in pursuing these ends, we have released enough carbon dioxide into the air to affect the climate and potentially the well-being of people and nations all over the planet for centuries to come. Higher global average air and ocean temperatures, widespread melting of snow and ice and rising global average sea level are some evidence of warming of the climate system that has been recorded since the 1970s. Most of the observed warming in the past 50 years has been caused by human activities, particularly producing and consuming fossil fuels, increasing agriculture and changing land use. These human activities have increased greenhouse gas (GHG) emissions leading to changes in the Earth's atmosphere. Carbon dioxide (CO2) and methane levels in the atmosphere are higher than at any time in the last 650000 years. Over the past century, increased CO2 emissions have boosted their level in the atmosphere from 280 to 379 parts per million (ppm), while methane levels rose even faster, from 715 to 1774 parts per billion (ppb). Changes in ocean acidity due to increase in carbon dioxide emissions, reported for the first time in 2004. If current trends and policies continue, the result will be a rapidly warming world. Action is needed now to significantly reduce global greenhouse gas (GHG) emissions in the coming decades. Therefore, Global environmental issues are getting more attention especially the increasing threat of global warming and climate change.

The relationship between C[O.sub.2] emissions and economic growth has been the focus of a number of studies. Interest in the link between income per capita and environmental quality arose from the pioneering work of Grossman and Krueger (1991) on the North American Free Trade Agreement (NAFTA), which immediately led to a very extensive literature on what Panayotou (1993) termed the Environmental Kuznets Curve (EKC).The seminal work by Grossman and Krueger (1991) paved the way for the empirical testing of the EKC theory and allowed numerous studies to explore linear and non-linear relationships between economic activity and emissions. According to Kuznets Curve hypothesis, pollution level increases by the development level but when the income is above the amount of threshold, the pollution level decreases. Therefore the relationships between the pollution level and income are shown like an inverted-U shaped curve.

As it is shown in the Figure-1, the upward movement of the curve captures the developing countries that move from agricultural based economy to industrialization phase. In the next phase, the income per capita exceeds the threshold one and the downward movement of the curve starts with a shift of economy structure towards services, increase in imports of industrial goods and stabilization of growth rates. However, with the pace of development as suggested by the Environmental Kuznets Curve (EKC) hypothesis, the level of carbon emission is expected to rise for many of the economies, contributing further to global warming. The validity of the EKC is itself a debatable issue and depending on

the level of development, countries might differ significantly in terms of their growth-pollution nexus. This linkage of emission and growth is also closely related to the relationship between energy consumption and carbon emission as combating energy use will, on one hand reduce the level of emission and on the other might affect economic growth in a negative manner. In addition, depending on several other factors, e.g. the composition of growth, type of economic activities, intensity of foreign trade etc., this growth-emission-energy consumption nexus is likely to be altered

The reason why policy makers have paid so much attention to this hypothesis is because it argues that growth is not only the cause of, but can also provide the cure for environmental degradation. …

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